Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

PRIVATE BUSINESS

LLOYD'S BILL

Lords Amendments agreed to.

Oral Answers to Questions — ENVIRONMENT

Microlight Aircraft

Mr. Nicholas Baker: asked the Secretary of State for the Environment if he will review the responsibility of his Department for environmental noise control in regard to microlight aircraft.

The Under-Secretary of State for the Environment (Mr. Giles Shaw): Responsibility for noise from aircraft, including microlight aircraft, rests with my right hon. Friend the Secretary of State for Trade, whilst I have an overall interest in all aspects of noise nuisance and specific responsibility for the control of neighbourhood noise under part III of the Control of Pollution Act 1974. The specific exclusion of aircraft from the Act was fully debated during the passage of the Bill. I have reconsidered the matter very carefully, but see no case at the moment for extending the current scope of the Act, which is designed particularly to deal with noise from fixed premises.

Mr. Baker: Is my hon. Friend aware that the noise from microlight aircraft, which are like flying motor cycles, is just as offensive to many people as noise from large aircraft? Will he reconsider the statutory exemptions that are given to that small, but offensive beast?

Mr. Shaw: I am aware that there is considerable public anxiety on this issue. It is primarily a matter for the Department of Trade, which, as my hon. Friend will be aware, deals with many aspects relating to aircraft.

Mr. Sheerman: That is not a satisfactory answer. Is the Minister aware that constituents of mine, who are persecuted by noise from hang gliders with engines, which are much the same as microlight aircraft, can get no answer from the Civil Aviation Authority, or any Government Department, that would give them some peace and rest?

Mr. Shaw: I appreciate the hon. Gentleman's concern. I understand that discussions are going on in the Department of Trade. I have no doubt that in due course my right hon. Friend will take the action that the hon. Gentleman suggests.

Sir Hector Monro: Will my hon. Friend and his hon. Friend the Under-Secretary of State for Trade, who is responsible for aviation matters, be careful not to regulate microlights out of existence? Does he agree that we should encourage people to fly, provided that they do not cause danger or inconvenience through noise?

Mr. Shaw: My hon. Friend is correct. There are legitimate uses for that type of aircraft. He will also be aware of the regulations that apply to piloted aircraft and aircraft that operate out of airfields. I do not see any case for making further adjustments to the noise regulations under the Control of Pollution Act 1974.

Home Counties (Population)

Mr. Michael McNair-Wilson: asked the Secretary of State for the Environment what increases in population in the Home Counties he took into account when approving the structure plans for the local authorities in the Home Counties.

Mr. Giles Shaw: My right hon. Friend took account of a wide range of information, including population increases. Each structure plan is based on population forecasts for its own individual area. As the projections relate to different time periods, it is not meaningful to give an aggregated figure for population increase for an area as large as the Home Counties.

Mr. McNair-Wilson: To what extent can population forecasts be described as accurate? If my hon. Friend believes that local authorities are providing accurate forecasts for the populations in their areas, may I ask whether he agrees that they should be considered to have the last word, except in the most exceptional circumstances?

Mr. Shaw: I cannot claim that population forecasts at any given moment have a high degree of accuracy. A structure plan has to take account of trends that put pressure on a county's resources. The county is obliged to take account of trends towards house building or the desire to live in certain areas when preparing provisions for the use of land.

Sports Council (Strategy)

Mr. Lofthouse: asked the Secretary of State for the Environment whether he has received the Sports Council's publication on its future strategy for sport; what is his policy towards the report's proposals; and if he will make a statement.

The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): Yes, I have received this document—"The Next Ten Years". I welcome the Sports Council's appraisal and I hope that all those involved in the provision of sport and recreation in our communities will study it carefully.

Mr. Lofthouse: The Minister will be aware that the Sports Council has put forward three options for funding during the next decade: first, participation; secondly, excellence in sports; and, thirdly, spending money to assist sports facilities. Which option do the Government favour? Have they any special programme for areas such as Toxteth, Bristol and Brixton? As the Government's policies have created 3 million unemployed, and bearing in mind that last week the Chancellor of the Exchequer


accepted that the figure would be nearly 5 million by 1990, does the hon. Gentleman accept that the Government have an obligation to provide recreational facilities?

Mr. Macfarlane: The Sports Council and my right hon. Friend the Secretary of State attach equal importance to all aspects of the strategy. The three aspects to which the hon. Gentleman referred are of equal importance in many regions. I welcome the fact that the Sports Council has published a clear statement of the objectives. I like the objective to create sporting opportunities for those between the ages of 13 and 24 and 45 and 59. A great deal of work is to be done in planning and preparation.
With regard to Toxteth and Brixton, the Merseyside initiative matches pound for pound. Since 1979–80 just under £16 million has been spent on sport and recreation. In the past year it has increased to just under £23 million, plus £1 million for the Merseyside initiative.

Mr. Stokes: With the greatest respect, does my hon. Friend really believe that the Sports Council is necessary? Could not voluntary bodies do the job better, with a great saving of money?

Mr. Macfarlane: If my hon. Friend appraises the Sports Council's publication, I believe that he will be totally convinced of the need for the Sports Council. It is important to work through voluntary organisations, but, equally, local authorities have a vital role in dispersing funds from the urban aid programme, derelict land grants and the inner city partnership, all of which can help to provide sport and recreation.

Mr. Denis Howell: Was the Minister consulted about the weekend speech of the Chief Secretary to the Treasury calling for the privatisation of recreational services? What does it mean, and how does it fit in with the strategy for sport? What is the Minister's estimate of the increased costs of swimming pools, football and cricket pitches and other sports facilities that will result? Most important of all, what do the Government believe will be the effect if we price sport and recreation beyond the reach of hundreds of thousands of young unemployed?

Mr. Macfarlane: The right hon. Gentleman has been around the House of Commons and the corridors of power for longer than I have.

Mr. Nicholas Winterton: Too long.

Mr. Macfarlane: The right hon. Gentleman knows that I cannot give him an answer here and now. No doubt he will approach the Chief Secretary.
There is an important partnership aspect. It is not just a question of the Government generating funds. It is up to the Sports Council, local authorities and others charged with planning sport and recreation to persuade commerce and industry to invest in the local community. That would certainly have a beneficial effect.

Gleneagles Agreement (Sports Council)

Mr. John Carlisle: asked the Secretary of State for the Environment what directions are given by his Department to the Sports Council on the Gleneagles agreement; and whether these directions relate to the council's allocation of funds.

Mr. Skinner: Speak a little faster!

Mr. Macfarlane: I am going at this speed especially for the hon. Gentleman at this time of day.
The Sports Council is fully conversant with, and supports, the Government's commitment to the Gleneagles agreement. The council is required by its Royal charter to take note of Government policy. On 12 October 1977 the Government directed the council to withhold any financial support that might otherwise be available to British sports people competing in or staging events in which South Africa is represented.

Mr. Carlisle: Does my hon. Friend accept that any Minister with responsibility for sport—I include the right hon. Member for Birmingham, Small Heath (Mr. Howell) when he held the position—has no authority to direct the Sports Council where it should place its funds, and I refer particularly to sports in which there is South African participation? Has not the time come for the Minister to look again at the South African sports which, like soccer, have become fully multi-racial and should be exempt from the Gleneagles agreement?

Mr. Macfarlane: I hope that my hon. Friend will consider the importance of multi-racial sport throughout the Commonwealth and, indeed, the world.

Mr. McNally: Does the Minister agree that the vast sums made available to send teams to South Africa show a political motive by the sponsors? Is there not ample evidence that it is a concerted attempt to undermine the Gleneagles agreement? Should not sporting bodies be told that so that they can tell their members, and should not those members who bring their sport into disrepute be disciplined?

Mr. Macfarlane: It is a difficult area. My right hon. Friend the Prime Minister, Foreign Office Ministers and I have made clear the Government's total commitment to the Gleneagles agreement, and we have conveyed that view to governing bodies. Most people will recognise that the tour was phoney, as many other tours have been.

Mr. Marlow: As my hon. Friend supports the Gleneagles agreement, and as he is no doubt aware that 18 per cent. of Israel's population is of Arab extraction, will he look at each international team from Israel to make sure that it reflects that proportion and, where it does not, take action through the Sports Council to ensure that money is not expended in that direction?

Mr. Macfarlane: I have no doubt that my hon. Friend is resourceful enough to approach the Foreign and Commonwealth Office on that matter.

Mr. Denis Howell: What does the Minister make of the antics of the hon. Member for Luton, West (Mr. Carlisle), who, on 18 June, demanded that the Home Secretary establish an inquiry into why the BBC was flying Mr. Jimmy Hill around Spain in pursuance of his World Cup duties, yet appeared on television within two weeks and demanded that the same Mr. Jimmy Hill be flown around South Africa in support of a private football organisation and in defiance of the Gleneagles agreement and the FIFA rules?

Mr. Macfarlane: I have no comment to make. Most people recognise that this and other tours are phoney. In recent weeks certain reputations have become tarnished and actions have bordered on the farcical. It is a matter not only for the domestic governing body, but for FIFA, and both bodies have made it clear that they exclude South Africa from international competition.

Mr. Carlisle: On a point of order, Mr. Speaker. With respect to my hon. Friend, in view of the unsatisfactory nature of the reply and the interest in the House in the subject, I give notice that I shall seek to raise the matter on the Adjournment.

Ancient Monuments Protection Act 1882

Mr. Beith: asked the Secretary of State for the Environment whether he has any plans to celebrate the centenary of the Ancient Monuments Protection Act 1882 with an exhibition similar to that being mounted by the Northern Ireland Department of the Environment.

The Secretary of State for the Environment (Mr. Michael Heseltine): There are no plans by my Department to celebrate with an exhibition the centenary of the Ancient Monuments Protection Act 1882
The centenary will be marked by a reception held in the rooms of the Society of Antiquaries on 11 November following a lecture on the centenary by my chief inspector of ancient monuments and historic buildings.
Other organisations are marking the event in various ways by special publications and lectures, and I shall be contributing to a BBC Radio 4 programme celebrating the event.

Mr. Beith: I welcome the close interest that the Secretary of State takes in the conservation of old buildings. Is not the time opportune to remind the public of the value of the work to future generations? Will he consider celebrating the centenary by updating legislation in related areas, such as the law on treasure trove and movable antiquities?

Mr. Heseltine: I share the hon. Gentleman's anxiety, but at present we have no proposals to update the legislation, although we keep such matters under review.

Local Authorities (Road Maintenance)

Mr. Roy Hughes: asked the Secretary of State for the Environment what consideration he gives to local authorities' local road maintenance needs in setting the rate support grant levels.

The Minister for Local Government and Environmental Services (Mr. Tom King): There are annual discussions with local government about the amount of relevant expenditure for rate support grant purposes on all services.
The provision for local road maintenance expenditure is primarily a matter for my right hon. Friend the Secretary of State for Transport and in Wales my right hon. Friend the Secretary of State for Wales.

Mr. Hughes: Does the Minister appreciate that as a result of adverse weather conditions road maintenance has fallen badly behind? If we are to improve our overall industrial efficiency, it is necessary to improve and adequately maintain our road system. Together with local authorities, will he do what he can to ensure that road maintenance is carried out as speedily as possible?

Mr. King: As the hon. Gentleman is probably aware, that is a question for my right hon. Friend the Secretary of State for Transport. However, I notice that about 96 per cent. of local authority bids this year were approved by the Government. That is a very high level.

Mr. Steen: Is my right hon. Friend aware that a growing pothole epidemic is affecting roads throughout London and is causing great danger to some of the 96,000 cyclists who commute into London every day? Will he advise the local authorities in London how they can best deal with this epidemic?

Mr. King: The answer will, I think, be fairly clear to my hon. Friend as it will be to the House. I have no doubt that the relevant authorities will take note of his comments.

Mr. Allan Roberts: Is the Minister aware that the Mersey Docks and Harbour Board must maintain many roads that should be maintained by local authorities? Will he ensure that the rate support grant settlement takes account of that fact so that the local authorities concerned can take over responsibility for the maintenance of those roads?

Mr. King: As I said in my original reply, this is intitially a matter for my right hon. Friend the Secretary of State for Transport as it involves transport expenditure. I shall ensure that the hon. Gentleman's comments are conveyed to him.

Lambeth, Islington and Hackney (Inner City Partnerships)

Mr. Proctor: asked the Secretary of State for the Environment how many meetings have been held under the chairmanship of the hon. Member for Ealing, Acton (Sir G. Young) of the inner city partnerships of Lambeth, Islington and Hackney; and what plans there are for future meetings.

The Under-Secretary of State for the Environment (Sir George Young): The first meeting of the Hackney partnership under my chairmanship will take place tomorrow. I hope to chair the Islington partnership in the autumn and the Lambeth partnership in December.

Mr. Proctor: I thank my hon. Friend for that reply. However, is it not time that he realised that efforts spent on such meetings are counter-productive, a deflection from the excellent work that he does elsewhere in his Department, and not consistent with good race relations in London?

Sir George Young: Government policy is to reinforce the economic and social fabric of our inner cities, in which the ethnic groups have a crucial role to play. For that reason, under the auspices of the partnership committees, we support many projects which we believe can play a real role in revitalising the economy of our inner cities.

Acid Rain

Mrs. Renée Short: asked the Secretary of State for the Environment whether he has had discussions with other countries about the problems of acid rain.

Mr. Stuart Holland: asked the Secretary of State for the Environment what action his Department is taking to diminish the incidence of acid rain pollution emanating from the United Kingdom.

Mr. Stallard: asked the Secretary of State for the Environment if he will make a statement on the policy of Her Majesty's Government towards incidence of acid rain pollution.

Mr. Giles Shaw: I have recently discussed the problems of acid rain with representatives of other countries at the acidification conference in Stockholm. For the results of the conference, I refer hon. Members to my answer of 15 July to my hon. Friend the Member for Northampton, South (Mr. Morris). We have other frequent contacts, especially in the context of the 1979 convention on long range transboundary air pollution, which we ratified on 15 July. Our emissions of suphur dioxide have already fallen by more than 20 per cent. during the last decade, and our energy conservation and fuel policies may well reduce this further.

Mrs. Short: I thank the Minister for that informative reply. There has been a drop in the level of pollution, but it appears that the countries worst affected by acid rain pollution are Britain and the United States. Is he aware that this problem is affecting not only Scandinavia, but regions as distant as the Arctic, and that eventually that could have serious repercussion on the world's ecology? I am aware, from a reply that the Minister gave recently, that we are spending about £1½ million in an attempt to resolve the problem of pollution. Does the hon. Gentleman agree that we must do much more and at least ensure that our power stations reduce their pollution of the atmosphere?

Mr. Shaw: I agree with the hon. Lady that pollution is an important problem which the Government must take seriously. That is why we are particularly pleased that the convention on long range transboundary air pollution has now been ratified by so many nations. In that convention there is a commitment to work towards generally acceptable methods of control of sulphur emissions, which includes sulphur emissions from power stations.

Mr. Robert Atkins: During his discussions with other countries, has my hon. Friend discovered any authority comparable with the North West water authority which charges ratepayers for rain falling on their roofs, be it acid or any other rain? Is that something that he would wish to encourage? Does he know of any other authority that does that—

Mr. Speaker: Order. Does the hon. Gentleman really feel that this is connected with the question on the Order Paper, which relates only to acid rain?

Mr. Robert Atkins: Mr. Speaker, I was asking my hon. Friend whether acid or any other rain attracted such a charge.

Mr. Shaw: This is an acid question, to which I propose to give an alkaline response. I take note of my hon. Friend's remarks.

Mr. Stephen Ross: I congratulate the Government on taking part in the Stockholm discussions on acid rain. Will the Government give much greater priority to a matter that will affect the world's population during the next 20 or 30 years? I believe that about 150 lakes in Canada are already dead, and the same is happening in Scandinavia. Forests are dying in Germany. This is a matter—

Mr. Speaker: Order. The hon. Gentleman is making a speech. He must ask a question.

Mr. Shaw: I assure the hon. Gentleman that we are taking this problem extremely seriously. The evidence so far produced does not indicate that, for a given reduction in sulphur emissions, there will be a given improvement in the ecology of the country concerned.

Mr. Golding: Is the Minister aware that some of Britain's rivers are now badly affected by acid rain, as are the runs of sea trout and salmon? Britain's anglers expect the Government to do something as quickly as possible.

Mr. Shaw: I am aware that there are localised problems in the United Kingdom. The hon. Gentleman will be aware that special researches are taking place in South West Scotland into the ecology of certain rivers. I assure him that this problem is not nearly as severe as the media often make out.

Dr. David Clark: I am interested in the 20 per cent. reduction in emissions, because I recollect hearing similar figures from the Minister's predecessors in the 1970s. Is the hon. Gentleman talking about a 20 per cent. reduction from stacks, in domestic fall-out or at international level? Those are different and important considerations. Will he assure the House that the Government will do everything possible to achieve international co-operation and will try to bring the Soviet Union into the negotiations, as it did not attend the Stockholm conference?

Mr. Shaw: That figure results from monitoring that we carry out from time to time in areas not directly associated with stacks. As I have said, that monitoring shows a progressive reduction in sulphur emissions totalling 20 per cent. I agree that this is an international problem. The sooner we get full support from all industrial nations, the better our chances of arriving at an internationally agreed solution.

Mr. Campbell-Savours: On a point of order, Mr. Speaker. I notice that I was excluded from the grouping on this question. Will you perhaps comment?

Mr. Speaker: It is not for me to comment, but I hope that we will reach the hon. Gentleman's question.

Mr. Campbell-Savours: It is question 40.

Mr. Speaker: In that case, we shall have to move rather fast.

Council Housing (Rents and Subsidies)

Mr. Frank Allaun: asked the Secretary of State for the Environment what was, approximately, the average net council rent at the latest available date and in May 1979; and what was the approximate annual council house subsidy for 1979–80 and 1982–83.

Sir George Young: Preliminary estimates indicate that the average unrebated rent of local authority dwellings in England and Wales, net of rates and other charges collected with rent, stood at approximately £13·54 per week at the end of April this year. In April 1979, it stood at £6·40.
In 1979–80 subsidies to English council house tenants—including Exchequer subsidy, voluntary rate fund contributions, and rent rebates—totalled £1,776 million, or some £360 per dwelling. I am not yet in a position to forecast the likely total for 1982–83.

Mr. Allaun: Does that not show that the Government do not give a damn about how one-third of families have to live? Is it not grossly unfair that we should give council tenants less than mortgagors, who get a 30 per cent. subsidy? Would not the introduction of Labour's rate-free scheme lessen the injustice?

Sir George Young: It shows no such thing. The nonsense was the decline in rent levels under Labour, when people who could be expected to pay more for their housing were indiscriminately subsidised, and there was a sensational cut in the housing investment programme to pay for it—a cut that we have now begun to reverse.
On the second part of the hon. Gentleman's question, the total subsidy per tenant in the current year is estimated at about £287 per annum compared with a total subsidy per owner-occupier of about £201 per annum.

Mr. Latham: Are we not making progress along the lines laid down in the 1978 Labour Government White Paper on public expenditure in which the right hon. Member for Heywood and Royton (Mr. Barnett) made it clear that the proportion of income paid by council tenants should be increased?

Sir George Young: If the Labour Government had adopted the policies enunciated by their own Treasury Minister, there would have been no need for the very large increases that we have had to introduce.

Mr. Greville Janner: Does the Minister appreciate that the real problem is that, because local authorities are being starved of funds for their housing programmes and forced to increase rents against their will, they cannot build the houses so desperately needed by people, such as those on the growing waiting list in the city of Leicester?

Sir George Young: If local authorities spend the money allocated to them for the current year, there should be a cash increase of about 30 per cent. over last year's spending—the first increase of that magnitude in about seven years.

Council and Public Sector Housing (Sales)

Mr. Heddle: asked the Secretary of State for the Environment what is his latest estimate of the number of local authority and other public sector tenants who have bought their homes since May 1979.

The Minister for Housing and Construction (Mr. John Stanley): It is estimated that up to 31 March the number of local authority, new town and housing association dwellings sold in Great Britain since the Government came to office was approximately 300,000.

Mr. Heddle: Does my hon. Friend agree that 300,000 tenants will now be grateful to the Government for having enabled them to realise their lifetime's ambition? Does he also agree that there may well be a further 100,000 to 150,000 tenants who would like to exercise their democratic rights and buy their own homes but who are frustrated in that wish by Labour-controlled local authorities imposing exorbitant service charges and onerous restrictive covenants and moving difficult tenants into houses next door to those who wish to buy their homes?

Mr. Stanley: My hon. Friend is absolutely right. As there are about 2·5 electors per council dwelling, about 1 million electors will now be very grateful to the Government for the opportunity to buy their homes. I also agree that many more will be able to buy their homes during this Parliament. Council tenants should also be aware that the Labour Party's publication "Labour's Programme '82" proposes that a future Labour Government should have the right in perpetuity to oblige

council tenants who have bought their homes to sell them back to the local authority, thus denying owner-occupiers who were previously council tenants the right to sell their own homes at a price of their own choosing.

Mr. Alton: How many homes have been sold in areas of high unemployment and how many were designated as hard to let?

Mr. Stanley: I cannot say how many were designated as hard to let, but it is extremely encouraging that in a number of areas of high unemployment there has been a substantial demand for the right to buy, not least in areas such as Liverpool, Skelmersdale and Knowsley.

Mr. Foster: While the Minister is berating Labour authorities for their lack of activity in this direction, will he bear in mind the activities of the Teesdale district council, which is controlled by Tories and Independents, and is now attempting to rob tenants of gardens which they have enjoyed for the past 30 years and which should be covered by the right to buy legislation? Will he deal with that problem?

Mr. Stanley: The definition of what land tenants may buy with their homes is set out in the Housing Act 1980. I shall be glad to look at the specific case to which the hon. Gentleman refers if he will write to me about it.

Mr. Squire: Has my hon. Friend read the report of the attitude of Sheffield council to would-be home purchasers and its use of service charges? Will he ask his Department to investigate whether there has been a deliberate breach of the 1980 Act?

Mr. Stanley: I am well aware of the concern among tenants in Sheffield about the council's policy on the imposition of service charges. My hon. Friend will be glad to know that I met representatives of the council on Monday this week.

Mr. Graham: Although it is true that some housing associations have been selling their houses, will the Minister congratulate Ken Livingstone, leader of the GLC, on revealing this week the disgraceful affairs of the Strongbridge housing association, which has enjoyed subsidies from both taxpayers and ratepayers for many years? Will he also comment on the effectiveness of the Housing Corporation's monitoring function, particularly in relation to the 1980 Act, which seeks to avoid relationships of the kind that have now been revealed, and the way in which the provisions of the Act have been treated with contempt nowhere more clearly than by his Conservative friends who are GLC councillors?

Mr. Stanley: The hon. Gentleman will be aware that the Housing Corporation is conducting a fact-finding exercise into the housing association that he mentioned. So far as I know, in all the matters raised by the gentleman to whom he refers, the right to buy is not an issue.

Local Government Expenditure (Cash Limit)

Mr. Kenneth Lewis: asked the Secretary of State for the Environment whether he has any plans to review the 4 per cent. cash limit for income of local government expenditure in 1983–84, in the light of present and prospective wage and salary measures and the probable inflation rate for this period.

Mr. Heseltine: I met the local authority associations on 19 July and heard their arguments for an increased cash


provision for local government current expenditure in 1983–84. In considering the Government's response I shall take into account current and prospective pay and price levels in local government.

Mr. Lewis: Does my right hon. Friend agree that there are two kinds of council, the stupidly extravagent and the sensibly economical, and that most of the latter are Conservative-controlled? Does he appreciate that in the past two years many Conservative councillors have followed his policy of being extremely hard in making economies in their spending? Will he therefore promise that he will not penalise them in the next year, as it is important that those who have helped him should now have his support?

Mr. Heseltine: I am grateful to my hon. Friend for giving me the opportunity to reassure him that I have tried consistently to recognise the co-operation that I have received from the more prudent local authorities, by expecting them to make fewer economies than those at the other end of the spending scale.

Mr. Kaufman: Does the right hon. Gentleman intend in the next financial year to maintain the GREA exemption for local authorities that spend above his ceilings? Secondly, in view of the great uncertainty that prevails among local authorities about their finances in the current year, will he state categorically that he does not intend to impose a mid-year hold-back penalty on local authorities in this financial year?

Mr. Heseltine: Certainly, it is important to give the clearest and earliest indication to local authorities of the Government's view about their expenditure plans for 1983–84. The right hon. Gentleman will be aware that we have already announced a hold-back exercise for the current year and I shall shortly be making the Government's final views known in respect of any additional hold-back.

Mr. Bulmer: Is my right hon. Friend aware that it costs more than £25 million per year to pay local government employees' wages and salaries physically, but that if they were to accept credit transfer half that money could be saved? Will he see what can be done to encourage local authorities to follow that course?

Mr. Heseltine: My hon. Friend makes an interesting point. Clearly, we wish to encourage anything that will save unnecessary expenditure which adds nothing to the quality of service provided.

Mr. Cryer: Is it not nonsensical for the Department to try to make local authorities cut expenditure when it knows full well that the result will be more people on the dole due to a deliberate act of Government policy, which in turn will mean that the Department of Employment will be paying much more unemployment benefit and the DHSS much more supplementary benefit? Is it not better to give local authorities the money to provide the services so as to keep people in jobs?

Mr. Heseltine: The hon. Gentleman will be well aware that he has seen only one side—the wrong side—of the argument. High levels of expenditure with consequent high rates destroy far more jobs than they create.

Local Authority Staff

Sir William Elliott: asked the Secretary of State for the Environment what are the total numbers of architects employed full or part-time in England in local authority departments in each of the past three years.

Mr. Steen: asked the Secretary of State for the Environment what is the total number of staff, principals and their assistants, employed full or part-time in England in the town and country planning departments of local authorities.

Mr. Greenway: asked the Secretary of State for the Environment what is the total number of staff employed full or part-time in England in the refuse collection and disposal departments of local authorities in each of the past two years.

Mr. Heseltine: From figures available in the joint manpower watch, the total numbers of staff, full or part-time, employed by local authorities in England were as follows:
In architectural services, including professional and administrative staff, at March in each of the past three years:


1980
23,152


1981
21,708


1982
20,265


In planning departments, including building control staff, at March 1982: 20,044;
In refuse collection and disposal services at March in each of the past two years:


1981
46,294


1982
43,640

Sir William Elliott: Does my right hon. Friend agree that if public architects' departments in local authorities were reduced in size a considerable saving could be made and architectural contracts could be put out to competitive tender?

Mr. Heseltine: I entirely agree with my hon. Friend. I can commend all local authorities to review the services that they provide and to test whether they can provide them more cheaply through the private sector.

Mr. Steen: Although my right hon. Friend will be delighted to learn that the number of local authority days lost through strikes was reduced from 1·25 million in 1977 to 0·25 million in 1980, does he agree that the best way to protect the ratepayer from the powers of the unions is to contract out as many services as possible to private enterprise?

Mr. Heseltine: I welcome what my hon. Friend said. I shall not cease to encourage local authorities to pursue that course of policy.

Mr. Greenway: Is my right hon. Friend not worried that the rise in local authority employees from 2 million to more than 3 million between 1965 and 1980 has put heavy pressure on the rates? Does he agree that services can be performed better by private enterprise? Will he try to push services out to private enterprise from local authorities wherever that is possible?

Mr. Heseltine: I agree with my hon. Friend's sentiments. He will realise that local authorities are autonomous bodies and that I do not have the power to compel them to act in that way. There is considerable scope for more private sector competition for local


authority services. The evidence, such as it is, shows that where such competition exists the ratepayers get a better deal.

Mr. Hoyle: When the Secretary of State gives that advice, will he be giving any advice on the terms and conditions that should be adopted by private enterprise? Will he follow the lead that he gave when he appointed Arnold Montague Alfred as chief executive of the PSA on £50,000 a year, plus VAT, which is paid into his management consultancy service company, which is owned by him and his wife? Will the right hon. Gentleman give that advice, which will cost more money rather than save it?

Mr. Heseltine: I am grateful for the opportunity to refer to the appointment of Mr. Alfred as head of the Propery Services Agency. He is now presiding over one of the fastest decreasing Government Departments in Whitehall. If I were asked to give local authorities guidance, my answer would be clear. As the private sector can usually provide a better service at less cost, local authorities should try to achieve those terms.

Mr. Anthony Grant: Will my right hon. Friend examine examples in other Western industrialised countries and note that in each one, including Sweden, there is much less local authority activity, especially in refuse collection? Is he aware that many more services in those countries are hived-off to the private sector than in Britain, much to the benefit of their citizens?

Mr. Heseltine: I know that my hon. Friend has made a study of these matters. I have recently taken the opportunity to visit Southend—not quite as far afield as my hon. Friend went—where it is quite apparent that the employees of the private sector firm, the firm itself and the ratepayers—the people whose refuse is being collected—are delighted with the change. I hope that all my right hon. and hon. Friends will ask their local authorities the same questions that they are now asking me.

Mr. Robert C. Brown: Is the Secretary of State aware that when there are countless thousands of unemployed construction workers in the North and when the city of Newcastle upon Tyne has a waiting list of 12,000 for council houses, the local authority is employing 22 per cent. fewer architects than when the right hon. Gentleman took office? Does he agree that that is deplorable?

Mr. Heseltine: I am sure that the hon. Gentleman would want to ask about the reasons for the capital reductions that he was keen to support when the party of which he is a member was in office. The Government have witnessed the first reversal in capital allocations to local authorities since 1975. Local authorities have responded to that by underspending on capital receipts by £400 million.

Central Berkshire (Housing)

Sir William van Straubenzee: asked the Secretary of State for the Environment how many houses must be built in central Berkshire under policy HI of the central Berkshire structure plan.

Mr. Giles Shaw: Under policy HI, the local planning authorities have to make available sufficient land to allow the construction of 31,700 houses in central Berkshire.

Sir William van Straubenzee: Would I correctly understand the complicated matter if I said that if Berkshire could demonstrate, in respect of its number of houses, that its commitment was met by existing planning consents, it need not feel that the Department of which my hon. Friend is a distinguished member will be chasing it for substantially increased housing that is bitterly resented in central Berkshire?

Mr. Shaw: I am well aware of my hon. Friend's assiduous concern for the welfare of the citizens of central Berkshire. Nevertheless, he will be aware that we are dealing with land upon which houses may be built. As far as I understand it, about 19,500 such consents are available, within the overall total of 31,700, for the period of the structure plan. That leaves a significant shortfall.

Wildlife and Countryside Act 1981

Mr. Dalyell: asked the Secretary of State for the Environment if he will place in the Library a document assessing the operation of the Wildlife and Country side Act, following its first year of operation.

Mr. King: I see no need for a report on all of the different parts of the Wildlife and Countryside Act. However, assessments of tae provisions of the Act which concern the Nature Conservancy Council and the Countryside Commission will be made by the bodies in their annual reports which are laid before Parliament.

Mr. Dalyell: How can we explain the continuing and irretrievable loss of so much unique habitat, not least on the Minister's own doorstep at West Sedgemoor?

Mr. King: The problems of protecting habitat have been with us for a considerable time. We are worried about some of the impact of this. I am worried about some of the incidents that took place during the consultation period before the notification of an SSSI. I take the matter seriously. I shall discuss it with agricultural and landowning interests. If we cannot achieve a satisfactory outcome of that we shall face a much more difficult circumstance, which will have to be considered carefully.

Mr. Colvin: Will my right hon. Friend say what action he is taking with regard to West Sedgemoor, which is facing erosion as a result of the activity of local farmers, before it is decided whether to designate it as an SSSI?

Mr. King: The matter is under discussion between the bodies concerned. Considerable consultations are taking place. My hon. Friend will be aware that the most important basis on which we can secure a proper agreement is by good will and sensible consultations between the parties concerned. There are conflicting interests, but we shall not protect the countryside and valuable habitats simply by Acts of Parliament and imposing legislation. We must secure the support of all parties. That is the Government's approach. It is the sensible one at the moment.

Mr. Andrew F. Bennett: Is the right hon. Gentleman aware that there is a great deal of anxiety in the North-West of England about the future of Kinder Scout? Will he do all that he can to help the Peak District national park to purchase that land if it is otherwise unable to do so because it is outbid by private interests? Will he insist that such private interests should respect all of the access


agreements and should not change the character of the moorlands or ruin them, as many other agricultural developers have done?

Mr. King: I am aware of the anxiety about Kinder Scout, but I would rather not comment further now. The matter is being considered by the bodies concerned. The type of consideration with which the hon. Gentleman is familiar as a result of his interest in these matters is in our minds at the moment.

Mr. Denis Howell: Is the right hon. Gentleman aware that when the Wildlife and Countryside Act 1981 went through Parliament its foundation, which was recommended to us, was the voluntary method of reaching agreement? Does he agree that it is clear from what he has said today that such voluntary agreement has broken down, as many of us feared it would, and that there have been serious consequences for important sites, the drainage of wetlands and use of scarce resources? Will the Minister take the matter seriously? We must return to it to protect the countryside and wildlife. Does he agree that we may need planning law to achieve that?

Mr. King: I repudiate entirely the opening part of the right hon. Gentleman's contribution. If we are to have an effective response, it requires co-operation and good will among the parties concerned. I hope that he will lend his good offices and those of his right hon. and hon. Friends to try to make the system work and not ally himself with certain bodies which are concerned to prove that the system cannot work, which could do lasting damage to the British countryside and habitat. The system can be made to work. The Government are determined to make sure that it does.

Construction Industry (Orders)

Mr. Guy Barnett: asked the Secretary of State for the Environment if the most recent information he has on the construction industry's prospects indicate any improvement in orders during the current year.

Mr. Stanley: I am glad to say that the latest construction new order figures published this afternoon show a number of improvements. In the past three months total construction orders were 11 per cent. higher in real terms than a year ago. Commercial orders were 10 per cent. higher, and so far this year have been at a higher level in real terms than in any year since 1973. In addition, in the past three months private housing orders were 41 per cent. higher in real terms than a year ago and public housing new orders were 46 per cent. higher.

Mr. Barnett: While welcoming signs of improvement—and slight ones at that—of the appalling situation that this country faces, will the Minister bear in mind that thousands of construction workers are out of work all over the country and that there is an appalling situation in many constituencies, for example in my constituency, with regard to the size of housing waiting lists? Is there not a need for a massive increase in the work of the construction industry? If the Government take seriously the unemployment figures that were announced yesterday, will they take into account the fact that the construction industry is labour-intensive? That is the way in which we need to get people back to work.

Mr. Stanley: The hon. Gentleman does not seem to take into account the fact that in the financial year that has

just been completed local authorities underspent by more than £400 million on the capital allocations that were made available to them. This year the increased provision that we have made permits an increase in cash spend on capital for housing by one-third. I hope that we shall have the support of the hon. Gentleman in asking all local authorities to make the fullest possible use of the increased provision that has been made on the housing side, reinforced by what my right hon. and learned Friend the Chancellor of the Exchequer did in his Budget.

Mr. Nicholas Winterton: I welcome the encouraging answer that has been given by my hon. Friend. Does he not agree that capital investment would be of tremendous benefit to the construction industry and a way of reducing unemployment? Will he therefore encourage my right hon. and learned Friend the Chancellor of the Exchequer to consider the introduction of index-linked construction bonds as a way of encouraging private capital into the provision of construction projects to improve our infrastructure?

Mr. Stanley: My right hon. Friends regularly consider proposals for private financing of construction work. With regard to the public sector, we must take into account what is the most economic way of debt financing for construction work. I share my hon. Friend's sentiments. It is very much the Government's wish, within the overall public expenditure constraints, to make the greatest possible provision for capital expenditure, bearing in mind the benefits of employment in the construction industry.

Mr. Alton: Does the Minister agree that while the construction industry is used as an economic barometer, it would be impossible for local authorities to gear their programmes to their capital allocations? Does he further agree that while 400,000 building workers are out of work, it is a downright scandal that 500,000 British people are in homes without inside toilets, running hot water or bathrooms?

Mr. Stanley: I do not agree with the hon. Gentleman that it is impossible for local authorities to gear their programmes to the capital allocation system. About one-fifth of all authorities last year spent 90 per cent. or more of their capital allocations plus their capital receipts. With regard to the other point, we have made an increased provision for home improvement grants. I am glad to say that in the last quarter the number of home improvement grants was at its highest for more than six years.

Sir William Clark: If my hon. Friend speaks to my right hon. and learned Friend the Chancellor of the Exchequer about more capital for the construction industry, will he tell him that to issue index-linked bonds for construction is merely putting off the evil day, and that future taxpayers will have to pick up the bill?

Mr. Nicholas Winterton: Absolute nonsense.

Mr. Stanley: As I said in reply to my hon. Friend the Member for Macclesfield (Mr. Winterton), in all forms of public debt financing we must look at the most economic way of providing debt financing for construction in the public sector.

Mr. Kaufman: After the Government's unprecedented attack on the construction industry, is it not unseemly for the Minister to rejoice on finding a few twitches of life in the body of his victim? If the Government persist in


passing the phoney debating point about underspend or capital receipts across the Floor of the House will the Minister agree, as he is concerned about capital spending, to increase the housing investment programme allocation of any local authority that tells him that it wants to spend more so that we can get rid of the 30 per cent. unemployment in the building industry which the Minister has created?

Mr. Stanley: There is nothing phoney about hundreds of millions of pounds of genuine cash receipts going to local authorities, which this Government alone made it possible for them to spend. One gets the impression from the right hon. Gentleman that anything is phoney if it does not reinforce his prejudices. The right hon. Gentleman talked about damage to the construction industry. I see that the Labour Party is now committed to the establishment of a national construction corporation based on the acquisition of one or more contractors, the extension of the activities of local authority direct labour organisations and the establishment of a building materials corporation. In terms of damage to the construction industry, that programme of nationalisation and municipalisation would be the greatest single disaster for it.

Council Houses and Flats

Mr. Dubs: asked the Secretary of State for the Environment how many council houses and flats are standing empty; and what proportion of this total are (a) awaiting repair and (b) awaiting purchasers.

Mr. Stanley: According to the authorities' own estimates, 97,000 council dwellings were vacant in England on 1 April 1981. The reasons for vacancy are available only for the 24,000 local authority dwellings that have been empty for more than a year. Of these, 11,700 were awaiting or undergoing repair or improvement and 4,500 were awaiting sale.

Mr. Dubs: Does the Minister agree that the hundreds of thousands of badly housed and homeless families find it extremely offensive that there are so many empty properties around them? They find it particularly offensive, when they live in areas such as Wandsworth, to see the numbers of empty council properties that are awaiting a purchaser. Does the Minister agree that that is a scandal? Will he monitor the situation more carefully and take steps to bring it to an end?

Mr. Stanley: Wandsworth council has a number of empty dwellings awaiting sale. The hon. Gentleman referred to a scandal. However, in the Labour-controlled city council of Manchester, of the number of dwellings that have been vacant for more than a year, the number awaiting sale was 596. Many people who are seeking houses find offensive the political position of the Labour Party which, in undertaking to repeal shorthold, will deliberately deprive many people of short-term rented accommodation.

Mr. Peter Bottomley: Does my hon. Friend agree that it would make a great deal of sense for local ratepayers if every council were required to publish a list, not only of council homes that have been standing empty for more than three months, but of any council homes that have been refused by two sets of people to whom they have been offered, so that other people can take over the homes and, if necessary, do the repairs themselves?

Mr. Stanley: I agree that more attention should be given to the number of local authority dwellings that are subject to two refusals. In some cases there are more than two refusals. The number of properties that have been standing empty for a long time feature in local authority HIP returns. If my hon. Friend would like to table a question on that matter, I shall give him details of all the empty properties.

Mr. John Evans: Is the Minister aware that in my constituency more than 100 excellent houses are standing empty which belong to the Home Office and were formerly prison officers' houses? Does he regard that as a scandal? Will the Minister suggest to his right hon. Friend, who is sitting next to him, that he should do something about those houses?

Mr. Stanley: As my right hon. Friend is next to me, I am sure he heard what the hon. Gentleman said.

Mr. Squire: In view of the plethora of statements that my hon. Friend mentioned as coming from Labour hon. Members, can my hon. Friend name one that will in any way reduce the problem outlined by the hon. Member for Battersea, South (Mr. Dubs)?

Mr. Stanley: My hon. Friend is right. It is the Government who have introduced shorthold and encouraged homesteading and improvement for sale. It is a Conservative Government who have sought to resolve the problem of empty dwellings.

Buckingham Palace (Security)

The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I should like to make a statement.
When I reported to the House on 12 July, I said I would make—as soon as I could—a further statement about the major breach of security at Buckingham Palace on 9 July. I have now received and considered a further report from Assistant Commissioner Dellow. I thought it right to place in the Library, and make available to right hon. and hon. Members in advance of this statement, a detailed account of the incident, the background to it, the failures that occurred and the subsequent action.
On 19 July I informed the House of the resignation of Commander Trestrail, the Queen's police officer, following his confession to having had over a number of years a homosexual relationship with a male prostitute. The confession raises further grave questions concerning the arrangements for the Queen's security. Accordingly, I have invited Lord Bridge to investigate the appointment as Queen's police officer and the activities of Commander Trestrail with a view to determining whether security was breached or put at risk; to advise whether in the light of that investigation any change in security arrangements is necessary or desirable; and to report. Lord Bridge is chairman of the security commission, but would conduct this inquiry sitting alone. I am glad to say that he has agreed to undertake the task. I shall, of course, inform the House of his findings. Although I have no evidence of a connection between this matter and the incident on 9 July, I am arranging for Lord Bridge to see all the papers relating to the events on 9 July so that he can make any further inquiries he considers necessary and advise on the adequacy of the police inquiries.
I turn now to the events of 9 July. Mr. Dellow's inquiry has revealed that, although there were technical failures, the basic cause of the breakdown of security was a failure by the police to respond efficiently and urgently. Furthermore, the incident revealed slackness and weaknesses in supervision. The commander, A district, has resigned from the force and the chief inspector at the palace has been transferred to other duties. Those were the two officers charged with the supervision of the uniformed officers at the palace.
Mr. Dellow has also outlined the serious errors and omissions which exposed the Queen to danger. As a result, four other police officers are subject to disciplinary inquiries. One of those officers has been suspended and two have been removed from their former duties. I am sure that the House will accept that the officers concerned have a right to a fair hearing. I must remind the House that I have an appellate responsibility in police discipline cases and it is not proper for me to comment further on those individual cases.
I have considered with the Commissioner what further arrangements are needed to ensure efficiency, greater professionalism and effective supervision. I have accepted his proposal that the protection of Her Majesty the Queen, other members of the royal family, and their residences will be the single responsibility of a deputy assistant commissioner reporting directly to the Commissioner. Deputy Assistant Commissioner Colin Smith has been appointed to this new post. He will head a new department responsible for all aspects of royalty protection. The senior

officers in the new royalty protection department, including DAC Smith, will work from Buckingham Palace. This will ensure the closest supervision at senior level and also effect the most direct links with the household and staff of the Queen and the senior officers of the household division, who have promised their full co-operation.
Operational responsibility for all protection will thus be brought together. DAC Smith's first task will include a remit to make recommendations for revised arrangements for posting and training and to keep them under review. He will pay particular attention to establishing and maintaining a regime of duty which is adequately varied and testing.
Since the incident, the number of uniformed police officers on protection duties has been increased. Some new technical security devices have been installed; some existing devices relocated; and all thoroughly tested.
Assistant Commissioner Dellow's inquiry will continue in respect of assessments of further physical security measures. In this task, I have asked Mr. Dellow to draw on all sources of available expertise, in the public and private sectors. The results of this work will enable the completion of Mr. Dellow's inquiry. The work of keeping these matters under review will then be carried forward by DAC Smith. But all physical measures depend ultimately on the people who operate them being of high quality and properly supervised. The new leadership and arrangements I have outlined are designed to ensure this.
I have asked the chief officers of other forces in England and Wales, who have responsibilities for royal residences, to review the arrangements they have made, and make any further recommendations beyond those measures which have already been implemented. The chief officers concerned will work closely with DAC Smith. My right hon. Friend the Secretary of State for Scotland has done the same within his area of responsibility.
I have decided to institute a new permanent group, comprising representatives of the royal households, the police, the Household Division and the Property Services Agency, chaired by one of my senior officials. This group will meet regularly to examine the effectiveness of the arrangements made. It will not in any way lessen the operational responsibility of DAC Smith and the Commissioner of Police of the Metropolis. The group will report personally to me.
I believe that the bringing together under a DAC of the responsibility for all protection for the Queen and members of her family, the changes in staffing, the improvements in equipment, and the monitoring of the new arrangements I have announced, constitute the best approach to improving palace security. I have also announced the terms of Lord Bridge's inquiry. Although I have no evidence that the incident of 9 July and the resignation of Commander Trestrail were connected, I have arranged for Lord Bridge to see the papers relating to the former event.
The shocking events of 9 July were handled by Her Majesty the Queen with great composure and resolution. But it is intolerable that Her Majesty should have been exposed to this intrusion and put at risk in this way. It is not the wish of Her Majesty, her Ministers or, I am sure, of this House, that she and other members of the royal family should be confined by measures of high security that deny private life and public accessibility, but the


safety of the sovereign must be paramount. There has been an appalling lapse of security and I know that the whole House—and the country—will demand that the lessons of this incident must be learned so that the protection that we give to the Queen and members of her family is the best that can be provided.

Mr. Roy Hattersley: Is the Home Secretary aware that he has reported today on two distinct but obliquely related matters? On the question of Mr. Trestrail, and particularly his positive vetting, he has promised a report from Lord Bridge, the chairman of the security commission.
The Trestrail case raises complex matters of principle and practice, and I am willing to postpone comment on them until Lord Bridge reports to the Home Secretary, and the Home Secretary, as promised, reports to the House. On the other hand, is the Home Secretary aware that the numerous intrusions into Buckingham Palace can and must be commented on immediately?
Is it not appalling that breaches of security have happened so often and with so little response? After the previous incursions but before the events of 9 July were made notorious in newspapers, did the Home Secretary visit the palace to check on security? Did the Commissioner of the Metropolitan Police visit the Palace to check on security? I am speaking of the period between the knowledge being received in Government and its being made public in the newspapers. If they did not make such visits, why did they not make them?
Will the Home Secretary confirm what is clear from his report, that the several incursions are the result of negligence at every level—failure by the police to respond effectively and urgently, slackness and weakness in supervision, and technical failures in security devices?
I share the Home Secretary's view that we must not jeopardise the prospects of a fair hearing for the officers who face disciplinary charges, but that does not apply to the entire force, and particularly to some very senior members of the Metropolitan force.
I believe that the whole House will agree that questions are necessary in a situation, which is almost beyond belief, in which the Queen, as the Head of State and a person particularly vulnerable to attack, should have been left in persistent danger.
I accept that the Home Secretary will take urgent and immediate action. I also accept that the action which he has reported today seems likely to prove effective. But one aspect of the whole incident continues to give great cause for alarm. Much of the report now in the Vote Office was quoted almost verbatim on television on Friday evening. If the report on royal security is not secure, what is secure, and how much faith can we place in those people who first leaked and who are now required to implement it?
Does the Home Secretary now agree that the bizarre story which he has told the House today is a further example of the inability of the Metropolitan Police successfully to discharge all the duties imposed upon it? It is too large, it attempts too many diverse tasks, it is badly managed, and it has no effective authority to control its actions.
Does not the evidence before the Home Secretary today, at least and at last, convince him of the need for a major revision in the governance and the organisation of

the Metropolitan Police? If he takes no action and if there are further failures and further fiascos, the responsibility will be his and his alone.

Mr. Whitelaw: In answer to the right hon. Gentleman's last point, I do not think that I have raised any question throughout about the responsibilities—not operational responsibilities—which I share in the final event. I have my responsibilities and I accept them, and no one can suggest that I have not accepted them over the last weeks.
I visited the palace after the other intrusions. I did not visit the palace for the purpose of examining security. It is important to remember that the operational disposition of police officers is a matter for the police themselves. If one breaches that position, one gets into very serious difficulties.
The senior officers visited the palace to check on security. I do not know whether the commissioner did, but certainly his very senior officers, who are directly responsible to him, did so.
The right hon. Gentleman referred to speculation and to what was said in the report getting to the BBC. Among the many things that I have been deeply upset about over the last fortnight, I was deeply upset about that. I checked very carefully and most of it could be regarded as at best informed speculation and no more. I believe that to be the case, because I have checked very carefully with all concerned.
With regard to the future of the Metropolitan Police, I accept—and so would the Commissioner—that there were grave mistakes on this occasion. It would be wrong not to recognise at the same time some of the remarkable achievements of the Metropolitan Police which have been seen in this House and in this country on many different occasions. One might even refer to the considerable work done by the Metropolitan Police in the tragic events of yesterday. It is wrong to look at one instance and one only.

Mr. Russell Kerr: Come off it.

Mr. Whitelaw: No, that is only fair to the Metropolitan Police. One cannot condemn every officer in the Metropolitan Police for some particular instances. That would be wrong. I am only saying that mistakes must be judged but that at the same time there are successes. I do not think that anyone would deny that. I shall certainly consider what the right hon. Gentleman said about the organisation of the Metropolitan Police. I shall look very carefully into it and discuss it with the new Commissioner, Sir Kenneth Newman, in October.

Mr. David Steel: The decision of the Home Secretary to establish a unified royalty protection department is welcome, but why were the steps that has now taken not taken after the previous entries into the palace described in his document? Why was there not at that time the tightening up of discipline and the reorganisation that he has now announced? Why did it have to await the appalling incident of 9 July?
Is Lord Bridge to review the positive vetting procedures?

Mr. Whitelaw: On the right hon. Gentleman's second point, that is within Lord Bridge's terms of reference and no doubt he will do so.
With regard to the first point, the other intrusions were all properly and successfully repelled. It is important to remember that.

Mr. John Wheeler: In view of the special responsibilities that Deputy Assistant Commissioner Smith is to assume, could my right hon. Friend tell the House about the experience that that officer has and why he in particular should do the job?

Mr. Whitelaw: He was recommended to me by the commissioner. He is 41 years old and joined the Metropolitan Police as a deputy assistant commissioner in May this year, having served as an assistant chief constable in the Thames Valley police and before that in Sussex, so he has had experience outside the Metropolitan Police, which I think is particularly important. He is also young and extremely well-equipped for the task.

Mr. John Morris: Does the Home Secretary recall the famous complaint of Mr. Macmillan when he was Prime Minister, that nobody told him anything?
Is it not extraordinary that the Home Office officials took such a long time to tell the Home Secretary of the events of the weekend? Is he satisfied with his control of his Home Office officials and his relationship with the Metropolitan Police? When precisely was he told of the other incursions into Buckingham Palace?

Mr. Whitelaw: With regard to the right hon. and learned Gentleman's second point about the affairs of Commander Trestrail, I am perfectly clear that I was told at the proper time in the proper way when I could be given a full report in order for me to come to Parliament at the earliest opportunity on Monday afternoon to make a full statement of all the facts. If I had not done that, there would have been accusations of cover-ups of all types. No one can accuse me at any stage of the proceedings of having sought to cover up anything at all. I hope at least that the right hon. and learned Gentleman will give me the credit for that, because I have certainly not done so. With regard to the previous intrusion, I was warned on the telephone in my car as I was travelling north to my constituency in Cumbria. I was finally told at one o'clock when I got to my home on that Friday afternoon.

Mr. Mark Carlisle: Since the chief officer of police—in this case the Commissioner—and not the Home Secretary is totally responsible for operational matters within his force, is my right hon. Friend satisfied that there has now been established within the Metropolitan Police a sufficiently clear line of responsibility for the security of Her Majesty the Queen on all occasions?

Mr. Whitelaw: That is the purpose of the measures that the Commissioner has proposed to me, and which I have approved and announced to the House today.

Mr. George Cunningham: Does the Home Secretary appreciate that a Home Secretary of any other party would have been crucified by the House and by the media for this affair? Is it not important for us all to realise that what happened at the Palace was a spectacularly dramatic illustration of a type of inefficiency that is rampant throughout British institutions—the failure of superiors properly to supervise their subordinates? How many times in the past three years have I nagged the Home Secretary to get the Home Office properly to exercise its functions as the police authority for London? Will the right hon. Gentleman confirm that there is not one civil servant in the Home Office exclusively

engaged on the job of police authority for London? Will he now take that matter more seriously in the future than he has in the past and perhaps have a meeting with London Members of Parliament to discuss how he will do it?

Mr. Whitelaw: I accept what the hon. Gentleman has said about the need to exercise the functions of the police authority of the Metropolis. I have taken that to heart. The organisation inside my police department is a matter for myself and my officials, but we shall take into account what the hon. Gentleman has said.

Mr. Edward Gardner: I congratulate my right hon. Friend on the measures that he has decided upon to improve the protection of the Queen and the royal family, but does he agree that one of the most extraordinary features of the break-in at Buckingham Palace on 9 July is that, following the murder of Earl Mountbatten, £2 million was made available for the improvement for security of Royal residences? In spite of that, is it not a fact that one alarm beam at Buckingham Palace was found to be at the wrong place and another, which might well have trapped the person who was trying to break in, was out of alignment? Does not my right hon. Friend agree that that was a most extraordinary state of affairs?

Mr. Whitelaw: Certainly, the expenditure of £2 million on improving the technological devices for the Royal residences in those years has been a considerable expenditure of taxpayers' money. I think that that is right. The failures on this occasion were serious, but I must return to what Mr. Dellow said and what is contained in paragraph 8 of the document that I circulated. He
emphasised that if police officers had been alert and competent, Fagan would have been apprehended well before he got close to the Private Apartments.
That is the essence of the matter. The technological equipment was there—in some cases it was not used and in other cases it was not observed.

Mr. George Foulkes: Has the Home Secretary noticed that there is usually quick action and vigilance immediately after such an event but that soon after there is a lapse into the previous poor practices? As a Member of the House was actually murdered, is the right hon. Gentleman satisfied with the security in the Palace of Westminster, since many hon. Members including myself have noticed a lapse in security over the past few weeks?

Mr. Whitelaw: I shall certainly discuss that matter with the House authorities, but I must make it clear to the hon. Gentleman that the responsibility for security in the Palace of Westminster is a matter for the House authorities and that they must satisfy themselves on the matter.

Sir William Clark: I am sure my right hon. Friend is aware that the more the fiasco at Buckingham Palace unfolds, the more astounded and shocked the British public are as to what went on. While one pays tribute to the bulk of the police force, surely my right hon. Friend will agree that there was sheer and gross incompetence on this occasion. While those involved must have a fair hearing, why is it that more people have not been suspended? Does my right hon. Friend agree that there must be something wrong with the law when, as I understand it, the intruder, Mr. Fagan, cannot be sued?

Mr. Whitelaw: My hon. Friend refers to the question whether Mr. Fagan should be prosecuted. I shall consider


that matter. The law of trespass is complicated, but I shall consider that matter with my right hon. and learned Friend the Lord Chancellor and my right hon. and learned Friend the Attorney-General.
With regard to my hon. Friend's first point, of those officers directly responsible for the supervision failure, one has resigned and one has been transferred to other duties.

Mr. Leo Abse: Are not the statements of the Home Secretary both on Monday and today a charter for blackmailers and a triumph for the lure of cheque-book journalism? Since Commander Trestrail has had no criminal offence charged against him and, despite the innuendo contained in the statement today, there has apparently been no breach of security on his part, is it not disgraceful that what has occurred is the substitution of public pillory for the penal punishment that this House rightly abolished? As a consequence, since it leaves open again the possibilities of blackmail, is it not more rather than less likely that there will be breaches of security as a result of the irresponsible statements made on both occasions by the Home Secretary?

Mr. Whitelaw: I should have thought that many people in the House and in the country would have believed that for an officer in Commander Trestrail's position to have had the association that he had with a male prostitute must have carried risks of blackmail. Surely it would have been criminally negligent not to pay attention to that information about a man in his position as soon as it came to the notice of the authorities.

Mrs. Jill Knight: Following the changes announced by the Home Secretary this afternoon, the most important question of all to ask my right hon. Friend is whether he can assure the House and the country that the Queen, who is inexpressibly dear to and honoured by her subjects, will henceforward always be safe in her own home?

Mr. Whitelaw: I would simply refer my hon. Friend to the best assurance that I believe any Government, any Parliament or any country can give, that the protection we give to the Queen and members of her family is the best that can be provided, always remembering that the safety of the sovereign must be paramount.

Mr. Arthur Davidson: Since three young Germans managed to scale the Palace walls in June 1981 and it was then decided to make those walls more secure, why did it take more than 12 months to build an alarm system and a barbed wire fence? How could it have taken so long once the palace and the Metropolitan Police had been alerted to the dangers?

Mr. Whitelaw: I shall look into all those matters. The Property Services Agency does the work. It has been doing a great deal of work at all the other residences. I shall discover why it took so long.

Sir Bernard Braine: My right hon. Friend will know by now that there is deep disquiet in the country. The Queen's safety concerns not only him but every one of her subjects. While there may be general approval for the announcement today that there will be one executive officer responsible and that that is where the buck will stop, will my right hon. Friend say why, when

he is the police authority for the Metropolis, that officer reports to the Commissioner of the Metropolitan Police and not on this matter directly to him?
Secondly, will Lord Bridge be able to recommend improvements in the palpably ineffective system of personal vetting?

Mr. Whitelaw: On the first point, the reason why this officer reports direct to the Commissioner is an important constitutional ore, and it is that the Commissioner of the Metropolitan Police, like all chief officers of police throughout the country, is operationally responsible for his force, and the work at Buckingham Palace is one for which the Commissioner is operationally responsible in the constitution. That is most important, and it must be preserved for the future.
In answer to my hon. Friend's second point, Lord Bridge will be able to make such recommendations.

Several Hon. Members: rose—

Mr. Speaker: Order. As the House is aware, I normally bring these questions to an end at four o'clock. I shall allow four more questions on either side, which will mean an exceptionally long time.

Mr. Geoffrey Robinson: Does the Home Secretary agree that the most extraordinary aspect of the excellent report that has been put in the Vote Office by his Department is the fact that, following Earl Mountbatten's assassination, a complete review of royal protection arrangements was carried out with his agreement by the Metropolitan Police? That review cost £2 million, and it was completed barely 18 months ago. Yet in spite of that review and the £2 million that was spent, there has been an enormous lapse in the security arrangements. Does he not therefore agree that the buck has to stop somewhere for accountability, and that it cannot be left with the hapless Commander Trestrail? It has to stop somewhere else, if it is not to stop with the Home Secretary himself.

Mr. Whitelaw: I thank the hon. Gentleman for saying that the report is very full, and I am sure that the House will agree that everything that could have been put in was put in. I have held nothing back from the House. I am therefore grateful to the hon. Gentleman for what he said.
In answer to what he said about the work that has been done, I come back to what Assistant Commissioner Dellow said—that in the end much of the work that is done depends on those people who work it, and the officers who were responsible for working it. That is where the lapse of security came. I believe that this was a matter of supervision. The commander of the district concerned, who was directly responsible, has resigned from the force, and that is right.

Mr. Anthony Beaumont-Dark: Is my right hon. Friend aware that, although examining the vetting procedure is vital and necessary, it must be stretching credulity beyond breaking point to believe that Commander Trestrail's proclivities for male prostitutes were not known by those who carried out the vetting? Does my right hon. Friend agree that Lord Bridge should investigate the people who did the vetting and that any appointments made by those people and by Commander Trestrail must be investigated in their turn, to


make sure that the right people have been appointed, and that they were not subverted by the likes of Commander Trestrail?

Mr. Whitelaw: All these matters will be looked into by Lord Bridge, and it would be wrong for me to prejudge the outcome.

Mr. Christopher Price: As the measures announced by the Home Secretary will clearly involve extra public expenditure, and as Deputy Assistant Commissioner Smith's responsibilities will now extend beyond Buckingham Palace to other royal residences outside London, is it fair and right that the expenditure involved in this exercise should fall solely on the ratepayers of Lewisham and other London boroughs, and not be taken up as a national responsibility, as it clearly should be?

Mr. Whitelaw: The hon. Gentleman will remember that the arrangements for police financing mean that the Government give a direct 50 per cent. grant on all expenditure, and, on top of that, a proportion of the rate support grant. That has been the way that police financing—

Mr. Price: We are responsible for 25 per cent.

Mr. Whitelaw: I believe that the method of police financing is correct, and I should like to stick to it.

Mr. Nicholas Winterton: It may sound surprising, coming from me, but may I tell the Government and my right hon. Friend that the majority of Conservative Members have total confidence in my right hon. Friends and the Government in the steps that they have taken to deal with this shocking breach of security at Buckingham Palace, and that we are greatly encouraged by the proposition which my right hon. Friend has put to the House? I wish to ask him only one question. Will he ensure that, where police officers have been incompetent in the operation of their duties, they are dismissed rather than moved to one side, so that all right hon. and hon. Members can be totally confident that the security of Her Majesty is not only paramount in this House but paramount with the police?

Mr. Whitelaw: I thank my hon. Friend for what he has said. I take note of his second point, but as I have already said, it would be wrong for me to prejudge the disciplinary inquiries on the police officers concerned.

Mr. Andrew Faulds: Since the major resignation so far tendered would not have been required if Lord Justice Diplock's recommendations and comments on homosexuality had been accepted—

Mr. A. J. Beith: ; Oh yes, it would.

Mr. Faulds: That is debatable; my argument is that the resignation would not have been required.
—and as no superior figure directly responsible for the major offence—the intrusion into the Queen's bedchamber—has yet resigned, when can we expect further resignations on this matter?

Mr. Whitelaw: I shall not enter into the debatable point. On the second point, I do not think that it would be reasonable for the hon. Gentleman to expect any more resignations.

Mr. John Stokes: Is my right hon. Friend aware that these grave events, which have deeply disturbed the whole nation, would have been the subject, in Her Majesty's Forces, of courts martial? Will there be similar undertakings in the Metropolitan Police, and will there be the necessary drastic reforms afterwards, so that the public can regain the confidence in the police which is so essential?

Mr. Whitelaw: Confidence in the police is essential. That is why I said that, although these events cast doubts on and undermine that confidence, the many other actions taken by the Metropolitan Police and other forces point in the other direction. The disciplinary procedures will proceed, as is proper in a public service. They are different from the procedures in the Armed Services, but they will proceed, as is proper.

Mr. Michael English: The Home Secretary missed something out of his statement, and I hope that he will include it. Under the Secretaries of State—not just the right hon. Gentleman but all of them—the people responsible for Her Majesty's personal security are the Officers of the Household. In the light of what the right hon. Gentleman has said, I assume that he intends to introduce legislation to transfer that responsibility to himself and the police. For example, there, is a person—I think his responsibility is outside the palace walls—the Master of the Horse, who has not offered his resignation. Can we ensure that, apart from sacking the monkeys, something will also be done about some of the organ grinders who have sinecure posts where they accept responsibility—admittedly unpaid?

Mr. Whitelaw: It is very unfair of the hon. Gentleman to attack those servants of the Queen who are not in a position to answer for themselves.

Mr. English: Some of them are on that Front Bench. They are Whips. They can answer here.

Mr. Whitelaw: By making the arrangements that I have with the new deputy assistant commissioner in charge of all royalty protection, working closely with the senior officers in Buckingham Palace and with the Household staff of the Queen and the senior officers of the Household Division, I believe that I have taken the right action. The operational responsibility will remain with that DAC who is responsible directly to the Commissioner of the Metropolitan Police and not to anyone else.

Mr. Eldon Griffiths: Bearing in mind the Diplock commission recommendation that the whole of the Civil Service should ordinarily not be subject to the rule that homosexual tendencies are a barrier to recruitment, and that that should be dealt with henceforth on a case-by-case basis, will my right hon. Friend confirm that henceforth all senior police officers who are put in security positions will be subject to positive vetting?

Mr. Whitelaw: That point was raised in Lord Diplock's report and the position is that positive vetting excludes most police officers other than the most senior ranks and members of the Special Branch. That is what Lord Diplock recommended and it remains the position.

Mr. Hattersley: The Home Secretary will be aware that most attention this afternoon has been focused on the performance of individual police officers. In the light of that, will he confirm that paragraph 9 of the document that he put in the Vote Office concludes:


This divided organisation has not encouraged the professionalism and dedication that would have prevented the incident on 9th July.
Does he understand that most of the Opposition's complaints are not about Metropolitan policemen but about the structure and constitution of the Metropolitan Police?

Mr. Whitelaw: The right hon. Gentleman has already made that point to me and I have said that I shall consider it.

Mr. Dennis Skinner: Why does not the right hon. Gentleman resign?

Mr. Speaker: Ten-Minute Bill, Mr. Dennis Canavan.

Mr. John Grant: On a point of order, Mr. Speaker. I have always understood that where an hon. Member indicated to you that he had a constituency interest—Mr. Fagan is my constituent—it is customary to call that hon. Member. Will you comment on that?

Mr. Speaker: I did not believe that it was a constituency interest. The whole House has the same interest in the matter.

Mr. Grant: This is victimization—

Hon. Members: Oh!

Mr. English: On a point of order, Mr Speaker.

Mr. Grant: rose—

Mr. Speaker: Will the hon. Member for Islington, Central (Mr. Grant) come back to his place? Very well. [HON MEMBERS: "Disgraceful."] The whole House can keep cool for a moment. The hon. Gentleman is obviously in a state of agitation.

Mr. Skinner: I think he has resigned.

Mr. Speaker: Has he? I am reluctant, in the absence of the hon. Member, to take any further action.

Mr. English: On a point of order, Mr. Speaker. I understand your natural reluctance and I have a natural reluctance to say what I am about to say. The fact that an hon. Member has walked out in a fit of temper does not mean that he is entitled to use the words that he just used of any person of any party who happens to hold your office. I shall repeat them if you wish, but I see no need to. However, the matter must be dealt with through an appropriate channel.

Mr. Speaker: In view of that statement, I shall send a message to the hon. Gentleman asking him to be in his place tomorrow. I did not hear the words. I am very fortunate because there is much that I do not hear. However, I shall ask him to be in his place tomorrow because it appears that he owes an apology to the House.

Scottish Parliament

Mr. Dennis Canavan: I beg to move,
That leave be given to bring in a Bill to set up a Scottish Parliament; and for related purposes.
It is three years since the Tory Government repealed the Scotland Act 1978, against the wishes of the majority of Scottish Members of Parliament and the majority of people who voted in the 1979 referendum. The need for a Scottish Parliament has become more urgent and apparent.
Because of the existence of a distinct legal system and body of Scots law, Scottish legislation affecting only the people of Scotland often requires different Bills and orders, but, because there is no distinct Scottish legislature, the Scottish Bills and orders must go through this place. We see the results in the difficulty in arranging the business of the House. For example, until 2.30 this morning the House was kept up debating a proposal by the Secretary of State for Scotland to reduce the rate support grant for Stirling district council by more than £l million.
I put it, even to hon. Members who are lukewarm about home rule for Scotland and to those who are absolutely opposed to it, that there may be some advantage in my Bill. If we had a Scottish Parliament dealing with Scottish business in Scotland, hon. Members on both sides of the House could get to their beds earlier instead of having to wait up until the wee small hours debating Scottish business that many of them do not understand.
More seriously, this morning's business was yet another example of the Tory Government using their Commons majority to push through decisions that are against the interests of the majority of Scottish people and against the wishes of most of their elected representatives both in Parliament and in local government. The Secretary of State for Scotland has taken dictatorial powers not only to reduce local authority budgets, but to push up rents and so force local authorities to sell council houses. In education, he has closed colleges, deprived children of their legal rights to school milk and meals and switched public money from local education authority schools to private, fee-paying schools. The United Kingdom Parliament also passed the iniquitous Criminal Justice (Scotland) Act 1980 that gives the Scottish police draconian powers of arrest, search and detention.
We often hear hon. Members, especially Conservative Members, talk about a lack of democracy and, rightly sometimes, about the lack of democracy in some Eastern European States, but Scotland has less autonomy than many Soviet satellite States. The Secretary of State for Scotland has autocratic powers that any Stalinist dictator would envy. Scottish people have the democratic right to take decisions that affect them. Those decisions should be taken by their elected representatives.
The Bill is not an SNP invention. It is in line with the policy decisions taken at successive Labour Party conferences in Scotland. My Bill proposes that the functions for which the Secretary of State for Scotland is responsible should be devolved to a Scottish Parliament that could legislate on such matters. The Parliament would form its own Executive to administer those functions, which include housing, health, education, social work services, agriculture, fisheries, criminal justice, transport, the environment, the Manpower Services Commission as


it operates in Scotland, and industrial intervention powers, including the Scottish Development Agency, so that the Assembly would have some powers to help the 348,000 unemployed in Scotland. The Assembly would also have revenue-raising powers that, combined with its legislative powers, would merit its being called a Parliament rather than an Assembly, unlike, for example, the Common Market Assembly, which is just a talking shop with no real legislative powers.
If in future the Scottish Parliament wishes more powers to be devolved to it, my Bill contains the necessary provision. If the concept of rolling devolution is acceptable to the Government for a gerrymandered Province such as Northern Ireland, it must be acceptable even to this Government for Scotland, because it is a country in its own right and the people of Scotland form a nation. They are entitled to as much self-determination as they wish. That is a principle that the Prime Minister seems ready to apply to the people of the Falkland Islands, but not to the people of Scotland.
Unlike the Scotland Act, my Bill would not be contingent on a rigged referendum. The previous referendum opened the way for the 40 per cent. wrecking amendment which was introduced by a Member of Parliament who has since defected to another party which is now trying to con the people of Scotland with phoney proposals for what it calls "decentralisation". I think that the people of Scotland will see through the phoney promises of a party which includes the hon. Member for Islington, South and Finsbury (Mr. Cunningham) and the right hon. Members for Crosby (Mrs. Williams) and Glasgow, Hillhead (Mr. Jenkins), who never showed any enthusiasm for devolution or home rule when they were Cabinet Ministers.
The people of Scotland have already seen through the phoney promises of certain Tories, such as Lord Home, who, in the referendum campaign, advised people to vote "No" because a future Tory Government would produce better alternative policies for devolution in Scotland. They have produced nothing. We have waited three years for alternative proposals from the Tory Government. We have waited in vain and that is why I am asking for leave to introduce the Bill.
All who are genuinely interested in a decentralised democracy ought to support me, because the Bill will be the beginning of a process of meaningful devolution of power, which will eventually be to the advantage of all the people of the United Kingdom.

Question put and agreed to.

Bill ordered to be brought in by Mr. Dennis Canavan, Mr. Allen Adams, Mr. George Foulkes, Mr. John Home Robertson, Mr. David Lambie, Mr. William McKelvey, Mr. R. McTaggart, Mr. David Marshall, Mr. John Maxton, Mr. Robert Party, Mr. John Morris and Mr. Gerard Fitt.

SCOTTISH PARLIAMENT

Mr. Dennis Canavan accordingly presented a Bill to set up a Scottish Parliament; and for related purposes: And the same was read the First time; and ordered to be read a Second time upon Wednesday 20 October and to be printed. [Bill 170.]

Mr. Bill Walker: On a point of order, Mr. Speaker. Is it not an abuse of the House to introduce a Bill at this late stage in the Session when there is no hope of its ever being passed?

Mr. Speaker: I shall be brief, to save time, as many hon. Members wish to speak on the main business. I should not be surpised if we had another similar motion on Wednesday of next week, if it is in order.

Orders of the Day — SUPPLY

[27TH ALLOTTED DAY]—considered.

Mr. Speaker: I have selected the amendment in the name of the right hon. Gentleman the Leader of the Opposition. I have not selected any of the amendments to the amendment.

Mr. Eric S. Heifer: I beg to move, to leave out from 'House' to the end of the Question and to add instead thereof
'believes that events have shown that Common Market arrangements for the Budget, Agriculture, Fisheries and Food are contrary to the interests of the United Kingdom and that the Treaty of Rome cannot provide a sound and secure basis for long term fruitful co-operation with the United Kingdom's European friends and allies'.
It is strange that on a Supply day one has the privilege of moving an amendment before the Government speak to the motion.
Today's debate is undoubtedly overshadowed by the statement that we have just heard from the Secretary of State on the security of the Royal household and particularly by the tragic and awful events that took place yesterday in various parts of London. Therefore, I do not expect that this debate will receive many headlines, and I do not expect the entire press corps to be present to hear about Common Market matters.
Despite the other serious events that have taken place, discussion of the Common Market is of great importance to the future of our country. At no time should we apologise for having important debates of this kind. The debate is on the report on "Developments in the European Community, July to December 1981." That was when the United Kingdom had the Presidency of the Council of Ministers, and it is therefore important to discuss what happened during that period.
The report says that
the Government's hopes for this period and how they were realised
were summarised in the then Foreign Secretary's speeches to the European Parliament on 8 July and on 17 December 1981. That means that we can have a wide-ranging debate, and the Opposition have put down an amendment that gives us the opportunity to broaden the debate to sake in all or any aspects of the Common Market.
In addition to dealing with budgetary issues and the CAP, the report deals with political co-operation, ranging from East-West relations to the Middle East and South-East Asia.
I should have liked to express a view on many, if not all, of those matters and I should particularly have liked to say something about the Middle East and the views that I and other members of my party hold on that question. I

should have liked to say something about Poland and Latin America, but time will prevent my getting too involved with such questions.
I propose to make a brief comment on the steel discussions, in which the Minister for Trade is involved. The Daily Telegraph today contains an interesting and important report. It says that officials from the Department of Trade and British Steel are travelling to Washington to start direct negotiations on quotas with the United States of America, and that the Minister for Trade is reported as saying after the Brussels talks:
We will carry more clout.
I find that interesting, because we have always been told that the important thing was that when the countries of the Common Market came together they were more united and determined and had more clout than if they acted individually. The hon. and learned Gentleman is making the point which some of us have made for some time, which is that, when it comes down to it, national interests have to be put before just about everything else. I am not arguing with the hon. and learned Gentleman's point. I put it on record that I find it interesting.
On Friday—and this is why I do not propose to debate the matter now—there will be a full debate on the proposed budget for next year. There are some interesting points in that proposed budget and I am sure that that will be an important debate.
The previous Foreign Secretary, in his speech on 8 July 1981, spoke of three main tasks facing the EEC. The first was the reform of the common agricultural policy to end its high costs and scandalous surpluses. He said:
It cannot be right that about half of the Community's budget should be spent simply on the storage and disposal of surplus food.
The second task, which relates to the first, was to direct EEC resources away from agriculture into industry and services. The right hon. Gentleman said that in the 1950s it was reasonable to suppose that agriculture needed support but industry just needed free competition, but
That is no longer the case.
The third task was budgetary reform. The Minister said that no country could ever get out exactly what it put in, but that
every Member State has to be broadly satisfied that the Community's financial basis is sound and equitable.
The Foreign Secretary set out the Government's objectives at that time with admirable clarity. I must say, I hope with equal clarity, that the Government have failed to make satisfactory progress towards any of those objectives.
The Common Market is now heading towards record food surpluses. The Government's opposition to the CAP has been no more than token and their attempt to veto this year's 9·7 per cent. price increase was nothing but a tactical ploy. They had already agreed in principle to an increase of that size.
There has been a similar climb down over the budget. There was a time when the Prime Minister made budgetary reform a personal crusade. All hon. Members will remember that. She made a great point of how she would deal with the budget. I note—I hope that hon. Members and the country have noted it too—that she seems to be keeping her head well down on this issue.
I could raise many interesting points on the budget, but I raise only one in passing. I notice that the Commission


has proposed an increase of 351 staff posts, including seven for the publications office. The bureaucratic set-up is obviously increasing the whole time.
Britain and West Germany remain the only net contributors to the EEC budget. France and Italy took out nearly £350 million last year, and Ireland very little less. The Government's commitment to a long-term solution of the budgetary problem evaporated earlier this year, and they accepted a one-year deal.

Mr. Tony Marlow: I shall not go the whole way with the hon. Gentleman. The Prime Minister has done a good job in difficult circumstances to get some of our money back.
However, the hon. Gentleman will know, as I do, that there are people traipsing around Britain saying that the Community budget cost only £6 million last year. Have the hon. Gentleman and hon. Members seen the piece of paper that I have from the Treasury? It is a cash flow document that shows that in 1980 the budget cost Britain £706 million, that last year it cost £397 million and that this year, as all hon. Members know, it will cost us considerably in excess of £400 million in cash flow terms. Therefore, the miracle that the Euro-fanatics are talking about has not happened. I hope that the hon. Gentleman will ensure, as I shall, that Britain knows full well what is happening in this regard.

Mr. Heffer: On some occasions it is wrong to give way, but on others it is right to do so. The hon. Gentleman has undoubtedly underlined my basic point. I shall return to some of the points about the budget, but I shall not deal with future budgets.
The two failures of the common agricultural policy and the budget are ultimately of far less importance than the second priority that was mentioned by the then Foreign Secretary, that of redirecting resources into industry and services.
Unemployment in the United Kingdom now stands at well over 3 million. Most of the responsibility for that rests with the Government. However, our membership of the EEC should not be ignored as the EEC controls much of our trading and industrial policies.
The then Foreign Secretary said that free competition was not enough. The truth is that free competition is a major cause of our problems. Free competition is a relic of nineteenth century laissez faire concepts. Contrary to the suggestion of the hon. Member for Southend, East (Mr. Taylor), it is preserved in the Treaty of Rome. It does not, as some pro-Marketeers claim, lead to prosperity for all. It does not lead to equality of wealth between nations. On the contrary, it perpetuates inequality and allows the strong to dominate the weak. That has always been the Labour Party's most fundamental objection to the Treaty of Rome.
One of the nation's leading economists, Lord Kaldor, predicted with great accuracy what would happen to British industry under the Treaty of Rome. The de-industrialisation that he predicted has come to pass. The 3 million plus on the dole are proof of that.
Let me give some figures to show what has happened to unemployment since Britain joined the EEC. I am not claiming that our entry into the EEC was in itself responsible for all unemployment, but I remember, as I am sure every other hon. Member does, the debates at the time

of Britain's entry into the Common Market. We were told that unless we joined the Common Market we would have massive unemployment, that there would be no jobs for the boys and that the only way to get jobs for the boys was to go into the Common Market and stay in it.
The total unemployment figures on a seasonally adjusted basis, and therefore excluding school leavers, were, in January 1973, 741,000, a percentage rate of 3·2 per cent., and in June 1982, 2,910,000, a percentage rate of 12·2 per cent. In January 1973 those unemployed under the age of 20 numbered 114,000, and in January 1982, 525,000
I want to contrast those statistics with figures from other European non-EEC countries. In 1972 Austria had an unemployment rate of 1·9 per cent. and in 1981 one of 2·4 per cent. In 1972 Norway had an unemployment rate of 1·7 per cent. and in 1981 it stood at 2 per cent. There was no great and rapid rise. In 1972 Sweden had an unemployment rate of 2·7 per cent., which was not much different in 1981. Switzerland is perhaps peculiar, but, nevertheless, in 1981 it had a rate of unemployment of less than 0·2 per cent. None of those countries is a member of the EEC.
We were told "If you do not join the European Economic Community your industry will collapse and you will find a massive rise in unemployment", but the facts prove the opposite. We could have dealt with these matters in our own way without being inveigled into the Market by the pro-Marketeers. In the six months from October of last year to March this year, our deficit in manufactures with the EEC stood at £2,131 million. In our trade in manufactures with the rest of the world we had a surplus of £3,297 million. This is a long-established pattern. It is our deficit with the EEC that is destroying our industries.
Those who were saying that we should join the Common Market have been proved wrong. Britain's membership of the Common Market has meant—

Sir Anthony Meyer: rose—

Mr. Heffer: I am not giving way at the moment.
There has developed a massive deficit in our non-oil balance of trade in manufactured goods with the EEC. There has been the burden of substantial annual net payments to the Community budget. There has been the denial of access to cheaper supplies of essential agricultural products, the imposition of unnecessarily high consumer prices for food and the acceptance of an agricultural regime that distorts the rational pattern of production. There has been the takeover by the EEC of significant powers to make laws and to levy taxes that apply to Britain.
Even the most ardent pro-Marketeers cannot possibly claim that Britain has really benefited from its membership of the EEC. An interesting written parliamentary reply to the hon. Member for Southend, East on 8 April showed that between 1 January 1973 and 31 December 1981 the United Kingdom paid £8,799 million to the EEC budget and received £5,314 million. The ratio of payments to receipts is five to three. At the same time as we are paying a levy of 52·92p on every pound of butter coming into the country from outside the EEC, subsidised butter is being supplied to the Soviet Union because of the manner in which the common agricultural policy works at the expense of the British people.
That is one example. There is insufficient time to give all the examples, but if one adds up the whole list the result


is fantastic. The amount in 1980 was 142,000 tonnes. Equally, total food levies in the last few years have gone up from £46 million in 1976 to £234 million in 1980. I wish to refer especially to the amounts in 1976 and 1977. The claim is made that the Government achieved a better deal than the Labour Government. It is necessary, however, to take account of the transitional arrangements under the Treaty of Accession. The Labour Government could not possibly have begun to deal with the situation until the transitional arrangements were out of the way. It was then possible to see what was happening. My right hon. Friends made a very good job during that period of defending the interests of the British people. We have nothing to be ashamed of.
Conservative Members accuse the Labour Government of not achieving as good a deal as this Government. The truth is that we were caught by those transitional arrangements.

Mr. Dennis Skinner: They were Tory transitional arrangements.

Mr. Heffer: That is right. They were brought in by the Conservatives. Our amendment states that
the Treaty of Rome cannot provide a sound and secure basis for long term fruitful co-operation with the United Kingdom's European friends and allies.
The Treaty stands in the way of Britain's being able to carry out the necessary measures to deal with unemployment and industrial decline. It is argued that the French are carrying out such measures irrespective of the Treaty. That is not true. They have already retreated on a number of issues after coming up against the Treaty.
The Opposition wish Britain to return to full employment as soon as this is humanly possible. To achieve that we believe that it is essential to have control over our own future. We wish, therefore, to avoid open and continual conflict with members of the Community. We could act as some other members of the Community appear to be doing. We could try to get round the provisions of the Treaty by subterfuge. We could ignore the Treaty, pretend that it was not there, and simply go bald-headed for our own interests. Our way is properly to negotiate Britain out of the Community by discussion and agreement. That is what Labour intends to do. In the meantime, while those discussions are going on, we shall carry out the measures which we believe are essential to get British industry back to work and our people fully employed.

Sir Anthony Meyer: Will the hon. Gentleman explain what was said to him by his Socialist colleagues in Europe in response to the proposal that we could negotiate ourselves a special status without prompting any counteraction?

Mr. Heifer: If the hon. Gentleman would like me to speak for another hour I should be able to give a full rundown of what happened at those meetings. I have no intention of doing so. The meetings were fairly well reported in most newspapers, although sometimes totally inaccurately. However, we have given reports to our own people. I shall therefore not become involved in explaining the matter to the hon. Gentleman.
It is necessary to get people back to work and to restore full employment. We shall need to take measures to manage our trade, including controls over the levels of manufactured imports. Such measures are specifically

forbidden under article 12 of the Treaty. We shall need to restore and to strengthen our exchange controls and to take powers to regulate the flow of direct investment overseas. Such controls will contravene articles 67 to 73 of the Treaty. We shall need to introduce a comprehensive planning strategy, which will of necessity include selective aids to industry. The Labour Government found to their cost that aids could be contrary to articles 90 and 92 of the Treaty, and we had to water down those aids. We shall need to take measures to control prices and inflation. The agricultural policy of the EEC will not allow us to reduce food prices by obtaining food imports from the cheapest sources of supply.
For all those reasons, the Labour Party believes that the time has come to begin the process of negotiating our way out of the straitjacket of the Rome Treaty. I wish to make it crystal clear that Labour believes in European unity, but a wider European unity not based on the Treaty of Rome. We believe that Europe's future will be best served by the development of democratic Socialist concepts throughout the whole of Europe. The Treaty is not the great Socialist measure that some Conservative Members think. In fact, it stops such a development taking place.

Mr. Skinner: My hon. Friend will, I know, wish to get the facts absolutely straight. On at least a couple of occasions he has used a carefully worded phrase to explain how Labour would negotiate its way out of the Treaty of Rome. Will he be more specific? Will he ally his remarks to the complete and fundamental basic commitment passed at conference that Britain will withdraw from the Common Market without a referendum, and so dispose of any ideas that may lurk in the minds of hon. Members, including myself, that the negotiations might take a considerable time? Let us be emphatic about this. My hon. Friend has a great opportunity to lay the Labour Party's policy straight on the line.

Mr. Heffer: I should have thought that everything that I have said adds up to a clear statement of the party's policy. When one says that one is negotiating withdrawal from the Treaty of Rome—the Common Market is based on the Treaty of Rome—that is making absolutely clear what is intended. I have never denied—I am sure that this goes for the entire Labour Party—that I support the policies and ideas of the Labour Party, as agreed at the annual conference.
As I was saying before I was so nicely interrupted, the Opposition believe that the Government have failed to keep their promises. They have not reached a firm agreement on future budget contributions. There is no firm assurance that the Luxembourg compromise will be maintained. They have not secured any real changes in the common agricultural policy, and there are few signs that such changes will come about. They have not secured agreement on a fishing policy that is in the interests of the British fishermen and people.
There are hon. Members, on both sides of the House, who argue that we should stay in the Common Market and change it from inside. That appears to some extent to be the meaning of the amendment tabled by some Conservative Members. For 10 years we have tried to change the Common Market from the inside. What has changed does not add up to a row of beans. We are arguing that it is time for a real change. That is why I ask the


House, including those hon. Members on the Government Benches who obviously agree with the views that I have put forward, to support the Opposition amendment.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): As the hon. Member for Liverpool, Walton (Mr. Heffer) said, the report that we are debating covers the period of the British Presidency—the second half of last year. That may seem an odd quirk in our procedures, given the passage of time since then, but the report can provide the basis for useful debate. It shows the essential nature of the Community and its working, the sort of European Community that we want and how we are working towards that end. It enables the Government to restate, and the House to examine, our clear commitment to Europe and the future of Great Britain inside the Community.
A Presidency of six months is, to a large extent, an artificial concept, as we made clear from the beginning. It is rare for any Community proposal to be conceived and brought successfully to birth during one Presidency. That is why it has sometimes been suggested that each Presidency should last for one year. I think that that would be probably too heavy a burden.
During our Presidency about 70 new Community measures were agreed. They vary greatly, and not many of them were spectacular. Few of those measures gained publicity. Even when they are reported, there is sometimes a tendency to mock such achievements and describe them as trivial. Those arrangements often provide a direct benefit to the individual. As examples I cite the decision of the Environment Council in December on measures against pollution and greater public safety; the agreement on social security provisions for the self-employed and help for the disabled; progress in energy—guidelines for dealing with a limited shortfall in oil supplies. Under the guidance of my right hon. and noble Friend Lord Carrington the Community agreed to an important strengthening of its procedures for co-operation on foreign policy. Each of those achievements is limited, but each is significant. Taken together, those 70 measures illustrate the steady, and I think irreversible, construction of the European Community and its political co-operation in foreign policy.

Mr. Nigel Spearing: Irreversible? Does the right hon. Gentleman agree that Great Britain's adherence to the EEC is with the continuing assent of Parliament? Does he suggest that the development of its institutions is inevitable and irreversible and that it is not possible for the country and the House to disengage from that organisation?

Mr. Hurd: No, of course not. The hon. Gentleman can be listening with only half an ear. I am coming to his point shortly. I believe that steadily, year by year, measures agreed by the member States are building a Community which will not be reversed.
From what was said by others after our Presidency, it is clear that we gained some respect for the brisk and businesslike way in which we handled Community business. I mention—I have never seen it mentioned elsewhere—that we ran the British Presidency in 1981 at a cost, in real terms, of little more than half the cost of the

first British Presidency in 1977. Nevertheless, as happens with all Presidencies, and as the hon. Member for Walton pointed out, we did not achieve all that we had hoped. We did not achieve major progress towards the completion of Common Market agreements for services—insurance and air transport. We believe that that is necessary to fill a lamentable gap in the carrying out of the treaty. We have not yet achieved a long overdue agreement on a revised common fisheries policy. We have not found a satisfactory long-term answer to the problems of the Community budget and Great Britain's contribution. As always, there remains plenty of unfinished business. We regard that as a reason for perseverance rather than the despair that the hon. Member for Walton described.
I turn to the present position and the future. We have debated one of the continuing problems—fish—within the past week. I shall not add much, except to stress that the vital interests of our fishing industry will not allow for much more delay in reaching an agreement on a common fisheries policy. There has been good progress towards that in recent months, particularly in bilateral talks. We hope that during the Danish Presidency that progress will continue until an agreement is reached.
I believe that it would be right to record the position about decision-making and the budget problem. My right hon. Friend the Foreign Secretary has reported fully to the House his discussions about future decision-making procedures. At the meeting on 20 June he left our partners in no doubt about our view that, where any member State considers that very important interests are at stake, discussion must be continued until unanimous agreement is reached. That was the practice followed by the Community after the adoption of the Luxembourg compromise in 1966.
That position, restated by my right hon. Friend on 20 June, was supported unreservedly by two member States and by two others with some qualifications. Obviously we should have preferred, as he made plain, a more clear-cut outcome, but the Luxembourg compromise was an agreement to disagree, and that remains the position. In the light of the discussion on 20 June, we judge at present that decisions are in practice likely to be taken on the basis that the Community has followed since 1966, with the one exception of 18 May.

Mr. Robert Maclennan: The Government, in the person of the Minister of Agriculture, Fisheries and Food, said that there was no question of there being a linkage of agricultural policy, fisheries policy and the budget, as those matters were quite distinct. He stated that in the House. At the negotiations, where the Government sought to invoke the Luxembourg compromise, they were linking them. Do the Government now take the view that it is a legitimate exercise of the Luxembourg veto to link matters that are proceeding in other Councils and thereby prohibit their process of decision-making?

Mr. Hurd: We covered that point to some extent in the debate on the Genscher-Colombo proposals. The essential point is that, in a Community of sovereign States, a member State must be the judge of what its important national interests are. If farm proposals cost a lot of money and a member State feels that the general arrangements for distributing burdens in the Community are unfair, there is a direct relevance. The stand that my right hon. Friend the


Minister of Agriculture, Fisheries and Food took at the Agriculture Council was entirely justified by the past and by the interests of this country.

Mr. Douglas Jay: The Minister said "we judge" when speaking of the present state of the Luxembourg compromise. Is it a formal decision of the Council or the EEC that is recorded or merely a description of the Government's state of mind?

Mr. Hurd: It is our present judgment following the discussion that I have reported, which resulted in an agreement to differ of more or less five to five, restating the Luxembourg compromise, which was an agreement to differ of five to one.
The House will recall that we reached agreement on 24 May on refunds to our budget contribution for 1982. That has given us a valuable breathing space. The £500 million refund for 1982 was less than we would have wished, but that was largely because our net contribution for 1980–81 turned out to be much lower than anyone had expected. That was a point that the hon. Member for Walton failed to take. Taking the three years covered by the 30 May agreement together—1980, 1981 and 1982—we can be reasonably satisfied with the outcome. As I said, it is a breathing space, not a permanment solution. We have achieved what the Labour Government singularly failed to achieve—a reduction during those three years of our net contribution to a level which, although still high, has not been intolerable.
The hon. Member for Walton made an extraordinary excursion into history when he claimed that the Government of 1976–77 was caught helpless by the transitional arrangements, but that entirely ignores the effort over which a great many trumpets were blown at the time—the renegotiation of 1975 carried out by the right hon. Member for Huyton (Sir H. Wilson) and his colleagues. We were told at the end of the renegotiation that it was all right; the great errors of the Conservative Government had been redressed. In particular, we were told about a financial mechanism that would deal with the problem. An elaborate and ingenious financial mechanism was worked out, but it did not work. It did not begin to solve the problem. We had not a penny of refund.
We do not claim that what we have achieved is perfect. I stressed that it has provided only a breathing space, but it is a great deal better than what was achieved, or rather not achieved, before.

Mr. Marlow: My right hon. Friend said that he wanted to look forward, and we want to look forward with him. There is a possibility that the Community budget will run out of funds. We are better able to spend funds frugally than those within the Community. Will he tell the House that the Government have set their face as flint against devising any other sources of Community funds that will be payable from the United Kingdom?

Mr. Hurd: I am prepared to look forward with my hon. Friend. We hold that the 1 per cent. VAT limit, with which he is thoroughly familiar, should remain. No other proposals are yet before us for any other way of dealing with the own resources problem. The problem is not imminent in the sense that the Community is not at present running out of cash, so I cannot add to what I have said.
My hon. Friend is adept at intervening in other people's speeches. In an intervention in the speech of the hon.

Member for Walton he brought forward a set of figures about the net position that he had derived from the Treasury. The difference between the two sets of figures is mainly because they are calculated on a different basis, and either basis would be fair. The refunds can be included in the year to which they relate or in the year in which they are paid. The £6 million net figure that my hon. Friend challenged is entirely correct. It takes account of our refunds for 1981 which are being paid this year. The £400 million figure that he quoted takes account only of 1980 refunds, the bulk of which were paid in 1981.

Mr. Marlow: That is not even right.

Mr. Hurd: I have sought to answer my hon. Friend's point.
Before long we shall have to tread the stony path of our budget contribution again. That is a pity. We had hoped by now that it would have been possible to achieve a longer-term settlement so that we did not have to reopen the files and the argument year by year. Our partners have agreed to decide on measures for 1983 and later by the end of November. Again, we shall have to invest much energy in the task. It is a thankless but necessary effort.
It is worth recalling that it is not by our wish that there is the specifically British item on the Community's agenda. In essence, it is a European, not a British, problem. To a large extent, it reflects the illogical lack of balance between agriculture and other items in the Community's spending. The lack of balance means that not only Britain but other member States may from time to time find themselves at an unfair, or even crippling, disadvantage. For example, under present arrangements, there is a risk that Portugal, when it joins the Community, will be a net contributor, even though it will be one of the poorest members
For that reason my right hon. and learned Friend the Chancellor of the Exchequer proposed in May last year at The Hague that the problems should be tackled on a European, not simply a British, basis. We regret that the approach was brushed aside and we were left once again to negotiate, as we did, a refund for Britain.
In the long run, the right answer must lie in achieving a better balance of policies. We need to curb the excesses of the agricultural policy. I do not believe that there is much controversy in the House about that. At the same time, we need to build sensible industrial and social programmes for the Community where the Community can do better through shared action than nation States can do individually. We spent a lot of time on that during the long discussion last year under chapter I of the mandate of 30 May which dealt with non-agricultural policies. We showed that the British are willing to identify and build up such programmes, particularly where they will help to deal with problems of unemployment.
We agree that the financial resources of both the regional development and social funds should continue to grow in real terms and that, in particular, we should continue to direct them towards areas of greatest need within the Community. A revised regulation for the regional fund is being discussed, and a major review of the social fund will start soon.
We want to make sure that both funds can make an increasingly important impact on the Community's regional and social problems—for example, industrial decline and youth unemployment. That is important. We shall continue to contribute energetically to that aim.

Mr. Roger Moate: My right hon. Friend has already moved some way beyond the point on which I wished to question him. He answered my hon. Friend the Member for Northampton, North (Mr. Marlow) in a way that could hinder rather than help us. My hon. Friend asked him to reaffirm that not only would the 1 per cent. VAT ceiling be retained, but that no other new sources of revenue would be made available to the Community. My right hon. Friend did not give that latter confirmation, yet the Prime Minister has confirmed that no new revenue resources would be made available. This is not a pedantic point, nor is it a question of debate. If my right hon. Friend does not give that same assurance, the Government will lose their only leverage to secure the reforms about which he is now speaking. Will he therefore give the assurance that I and my hon. Friend have been seeking?

Mr. Hurd: Obviously, I cannot give an assurance for ever. At present there are no proposals for an increase in own resources, and we do not believe that at present any such proposals would be justified. That is as clear a statement of the position as anyone could reasonably expect.

Mr. Ron Leighton: Does the right hon. Gentleman agree with the Prime Minister or not?

Mr. Hurd: I think that I have repeated what the Prime Minister has said. [HON. MEMBERS: "No."] That is usually the position—

Mr. Spearing: Not today.

Mr. Hurd: —and I do not think there is any great difficulty about it.
I was talking about the need for a better balance in Community policies. As that is still lacking, continuing refunds to Britain will still be necessary, and we shall negotiate hard to achieve them.
During the present lull of a few weeks before fresh discussions on Britain's budgetary problems begin, we must remind our partners that this subject cannot be ignored and will not go away. There is still occasional confusion on this subject in the European press. Contrary to what is sometimes written and said, we have honoured our obligations under the treaties. We accept the principles of the CAP as they are defined in the Treaty of Rome. We are not asking for a juste retour. We are willing to remain a modest net contributor, and here I follow word by word the Prime Minister's position.
Our trade has adapted itself to Community membership faster than many thought possible. We badly want to find a solution to this problem so that energies can be channelled elsewhere. A solution will be needed—our partners should be aware of that—to remove this real and justified grievance from the minds of those in the House and elsewhere who debate and decide the form and the fact of our membership of the Community.
The future enlargement of the Community to include Spain and Portugal is another important subject. That is important for the strengthening of democracy in Europe, and the Community has accepted that the political benefits from this enlargement are overriding. At its meeting at the end of June, the European Council reaffirmed what it had said previously, set out the Community's commitment to complete the accession negotiations and stressed the importance of progress.

Mr. Leighton: What are the benefits?

Mr. Hurd: These two countries, with which Britain has had close traditional links, have thrown off one form of dictatorship and not shackled themselves with another. They have told the Community "We want to belong, because we believe that belonging will strengthen our democracy." Anyone with a sense of European history will regard that as important. That request has been made mainly on political grounds, which it would be irresponsible to turn down.
The European Council also asked the Commission to prepare a new inventory of the different problems. We think that would be useful.
Some progress has been made in these negotiations. There have been a number of meetings with Portugal and Spain this year. I shall not go into the details, but they can be given at the end of the debate if hon. Members are interested. There will be a further ministerial conference with both applicants in September and October, which we hope will draw the sides further together. The main chapters not yet tackled—I say this to show that there is still a long way to go—are agriculture, fisheries, institutions and social affairs.
The French have recently expressed concern at the problems posed by enlargement, particularly with regard to Mediterranean agriculture. They have argued that these problems have not been properly tackled inside the Community. We do not disagree with the French claim that there are substantial problems, but in our view the best way to resolve them is to get on with the negotiations. We hope that the Community is not far from agreement on a reform of the wine regime, and progress is being made on fruit and vegetables. We see no reason why negotiations on these matters with Spain and Portugal should not start soon. That is what we are urging on our partners. We want to get on with what is still a difficult job.
The other important international issue facing the Community is the need to deal with the looming problem of our trading relationships with our major trading partners—the United States and Japan. There is the major problem of steel, to which the hon. Member for Walton referred. The Minister who has taken part in the negotiations will deal with that when he replies to the debate.

Mr. R. C. Mitchell: Will the right hon. Gentleman confirm that it would be against the spirit of the Treaty of Rome if there were any closed frontiers between two Community countries?

Mr. Hurd: Not just against the treaty, but it is inconceivable that there should ever be a closed border between the territories of two members of the Community.
We listened to the hon. Member for Walton with great care. He again made the case for British withdrawal from the Community, although in terms that were not sufficiently precise to suit his hon. Friend the Member for Bolsover (Mr. Skinner). I do not think that that is a credible policy for the Opposition to put forward. For a start, it is repudiated in explicit terms by the Opposition spokesman on foreign affairs, the right hon. Member for Leeds, East (Mr. Healey), and the Opposition spokesman on home affairs, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). It is questioned within the TUC, particularly, if press reports are right, by the TUC


steel committee, in forthright terms. From recent election results, we can see that it is proving an absolute dud as a vote winner.
The policy of withdrawal has simply not got off the ground as a political issue. That is because most people, whatever their criticisms of the Community, many of which are valid, believe that it would be foolish to put at risk the thousands of jobs that are dependent on exports and even more at risk the jobs that are dependent on inward investment which clearly and explicitly results from our membership of the Community. Therefore, although I was a little apprehensive about it a year or so ago, it is clear to me from all that has happened that the so-called policy of withdrawal is a dud.

Mr. Jack Straw: We are used to hearing scare stories about the number of jobs likely to be lost if Britain withdraws from the Common Market. It is interesting to note that the numbers involved vary according to the spokesman. The Minister said that it would be hundreds of thousands, the Secretary of State for Industry suggested 1 million and the CBI 3 million. However, the claims have one thing in common—there is absolutely no substance in them.
What systematic study has the Foreign Office or the Department of Trade made about the effects of withdrawal? If none has been made, will the Government institute a study and make the calculations and conclusions available to the House?

Mr. Hurd: The hon. Gentleman should listen with care before he intervenes. I did not say that jobs would be lost. I said that they would be put at risk. I believe that is a fair statement. Moreover, I referred to thousands of jobs, not to hundreds of thousands. I do not believe that the figure can be quantified. [HON. MEMBERS: "Oh!"] If the Labour Party carried out the policy outlined by the hon. Member for Walton and put on that degree of control, I believe that jobs dependent on exports would probably be lost. Therefore, they are at risk. Even more certainly, quotations from industrialists investing in Wales and Scotland especially make it clear that they have brought those jobs to this country because of our membership of the Community. Therefore, it was entirely fair to say—I chose the phrase very cautiously—that thousands of jobs would be at risk if the Labour Party carried out its policies.

Mr. Richard Body: Will my hon. Friend give way?

Mr. Hurd: Perhaps I could continue for a little.
The reason why the dominant faction of the Labour Party follows that policy was put clearly and honestly by the hon. Member for Walton. Those members of the Labour Party believe that the Treaty of Rome, being based fundamentally on principles of competition that the hon. Gentleman regards as outdated, would prevent the Labour Party from carrying Socialism in one country to the lengths that it plans. On the contrary, some members of the Conservative Party seem to believe that the Community is an ideal vehicle for Socialism.
The truth seems to be that there is nothing in Community membership to prevent elected Governments from carrying out the policies on which they were elected, so long as those policies—this is an important proviso—do not destroy the elements of competition and freedom that

are fundamental to the functioning of the treaties of the Community and are written into the treaties that member States have signed.
It is that limitation—and there is no real doubt about it—that irks the extreme members of the Labour Party, because they wish to go much further in import controls and in multiplying State aids than either the French or the Greeks, to name two Socialist Governments now within the Community. The Community and its institutions, without being dogmatic, work in the general direction of free industrial and economic policies while seeking to reconcile that with support for agriculture. I suggest that for a British Conservative there can be nothing strange in trying to run those two aims in harness—general free industrial and economic policies combined with support for agriculture—although we may and do criticise the way in which it is actually done.
Other hon. Members, including some of my hon. Friends, favour a more sophisticated approach than withdrawal. They would like to pick and choose between different aspects of Community membership, keeping some and discarding others. Some, for example, would like political co-operation to continue, but would reject actual membership of the Community, while others would like to see continuation of an industrial free trade area but wish to opt out of the common agricultural policy.
I believe that those who wish to pull Britain out of the CAP have not squarely faced the effect that that would have on British agriculture and, thus, on the British economy. I think that most people would agree that British agriculture should be sustained and encouraged. Yet it is common to hear criticism of the CAP—we heard it from the hon. Member for Walton—on the grounds both that it puts up food prices for the consumer and imposes an unfair burden on the taxpayer. The hon. Gentleman cannot have it both ways. Either British agriculture would be sustained by efficiency payments, in which case the taxpayer would bear a heavy burden, or it would be sustained by levies, in which case prices in the shops would be higher than world prices.

Mr. Heffer: It has been understood since the end of the last war that there must be some public expenditure to help the farmers. Our objection is to helping not our farmers, but the French farmers and all the others in the Common Market.

Mr. Hurd: As I have said, I do not think that the hon. Gentleman has squarely faced the implications of what he says. He criticises the CAP on the grounds both that it keeps food prices up and imposes a burden on the taxpayer. We criticise its excesses, as I have already done. The hon. Gentleman should be aware of the order of cost—I do not think that the Labour Party has faced this—that would be imposed on the British taxpayer if we returned to deficiency payments. One estimate is £2,000 million, and I understand that an academic study is about to appear suggesting that the cost would be £2,400 million. Those are enormous sums even when compared with our total contribution.

Sir Nicholas Bonsor: My right hon. Friend is not doing justice to the case against the CAP. There are two other aspects with which he has not dealt. First, in many instances, farmers are prohibited from being efficient by the controls imposed on them by the CAP. An example of this is our hyper-efficient milk industry which


cannot expand as it otherwise would due to the levies imposed on it to prevent precisely that. Secondly, if the restrictions on food imports were lifted, we would be able to import food at world prices from our old markets outside the Common Market. Therefore, the cost to the consumer would be reduced in significant areas.

Mr. Hurd: I was dealing with the budgetary cost of sustaining British agriculture. We are among the critics of the CAP, but those who wish to demolish it altogether have not squarely faced the resulting cost of sustaining British agriculture. As my hon. Friend will certainly know, British agriculture has done much better out of the CAP in recent years. Indeed, one of the reasons why our net contributions to Europe have been smaller than expected is precisely—contrary to the impression given by my hon. Friend—that British farmers have done a great deal better out of the CAP.

Mr. Body: Does my hon. Friend appreciate that there is an underlying fallacy in what he says? As a result of the CAP, there has been a major shift in British agriculture away from livestock production to two cereal growings? If we continue to grow vast quantities of cereal, he is right to say that the cost of subsidising agriculture would be horrific—perhaps £2,000 million—but if we reverted to the previous system we should be encouraging livestock production again and we are far better at that form of agriculture.

Mr. Hurd: I am not sure that my hon. Friend's view would be shared by the British farming industry as a whole.

Mr. Spearing: Because they get too much out of the system.

Mr. Hurd: No, and I shall rest the argument at that.

Mr. Spearing: It is our money.

Mr. Hurd: The hon. Gentleman is quite right. It is our money anyway, but it is misleading and dishonest to give the impression that all the money would be saved if the CAP were demolished.
I am trying to deal fairly with the argument for an industrial free trade area without an agricultural policy. That takes us right back to the 1950s, because it was commonplace in those times. The late Mr. Reginald Maudling worked with great skill to negotiate just such an outcome, but he could not manage it. During that period, neither the Government of this country nor the House, I think, really understood what was going on in Europe or the political impetus that was creating the Community. For years we thought that we could pick and choose and that everyone would be grateful to serve up to us whatever we fancied from the European menu. That was a mistake then, and it would be a mistake and a backward step now to return to those misconceptions of the past. That approach did not work before and it is even less likely to work now.
There can be and is some flexibility in the matter. We have recently witnessed two examples of Community policies in which all members acquiesced, but in which not all joined. One example is sanctions against Argentina. Italy and Ireland did not join, but they did not obstruct.

Mr. Straw: Pull the other one.

Mr. Hurd: That is a clear statement of fact. Perhaps the hon. Gentleman would like to challenge it?

Mr. Straw: I shall willingly take up the challenge. Surely the Minister does not suggest that the Common Market's disarray over sanctions against Argentina is a sign of its cohesion. It was a serious blemish, even on the record that the right hon. Gentleman presents to the House.

Mr. Hurd: Again, the hon. Gentleman did not listen to what I said. I was using that as an example of a policy being adopted, but not all members joining it. They did not obstruct it.
The European monetary system is another example. We accept that other members join in the exchange rate mechanism within the EMS, but we do not take part. It would be rash to push that principle too far, as the examples that I have given were additional policies. In neither case—indeed, in no case that can be quoted—has any member State tried to reverse or undermine an existing or accepted Community policy.
It is probable that if that right were ever claimed by one member State, it would be claimed by others, and we should rapidly witness the unravelling of the Community. At worst, that could lead to the destruction of the European idea. No hon. Member who has a sense of history would like to see protectionism or excessive nationalism rampage through Europe all over again following the collapse of the Community. At best, the suggested change of policy by Britain would lead to the survival of the Community as a Continental bloc based mainly on France, Germany and the Low Countries. No doubt we could take part, as is suggested, in peripheral arrangements. There would be a smile and a chair for us when we turned up to discuss matters of mutual interest. But that Continental bloc, which is our biggest customer, and several times more economically powerful than ourselves, would take economic decisions that directly affected the livelihoods of most British people, and they would be decisions over which we would have no power or control.

Mr. Spearing: Is that not the case now?

Mr. Hurd: The whole thrust of British foreign policy through the centuries has been to prevent that type of development.
Those are some of the ideas that persuade us that our policy must continue to be based on full and energetic membership of the Community. That is the negative side. When faced with the Opposition, it is reasonable to point out the negative consequences to Britain of their obstinate antagonism to Europe. However, the real argument is positive.
Progress in building the Community has been slow. Many examples of that may be found. It has been so slow that exasperation and impatience are natural. Nevertheless, it is absurd to imagine that, after so many centuries of dispute and war, Europe could be built in a day or even in a decade.
I do not believe that I am a dreamer or a fanatic in these matters. It is hard for anyone who attends meetings of the Council of Ministers to be either. The grind of day-to-day business is wearing, but the point that Opposition Members miss is that, despite that grind, disappointment and delay, the work moves forward.
I hope that Opposition Members will take my views as personal views. Sometimes, after hours of long


discussions, one finds that, in spite of the slow and exasperating ways of the Council, there is a sudden move forward and a willingness to make progress. There is even, dare I say it, a feeling of community. Those moments are still few and far between, but they occur. There were a few during the British Presidency. It is worth waiting and working for those moments in the British national interest. Our commitment to do so will remain.

Mr. J. Enoch Powell: Until he ran into some flack at the end of his speech, the Minister of State had, as he usually does, presented a suave and rather reassuring picture of developments in the Community. We can assure him that no hon. Member is in any danger of mistaking him for either a dreamer or a fanatic. But there was one point at which the mask slipped a little. That was when he applied to the developments the adjective "irreversible". That led to an exchange with the hon. Member for Newham, South (Mr. Spearing). Following that exchange, the Minister of State redefined "irreversible" as meaning what will not be reversed. It would be an interesting disquisition, not suitable for this type of debate, to ascertain the difference between "irreversible" and what will not be reversed. Interesting philosophical regions could be traversed on the way.
I shall refer to one such development that is pregnant with irreversibility in one sense or another. From the beginning of this business of Britain and the European Economic Community, the way has been strewn with assurances and reassurances. At every stage, from the election of 1970 onwards, the public were assured that it was only so much, what they could see in front of them, what was present just at that time, to which they were being asked to give their assent. The House was told over and again that any expansion, any further excursions, any excrescences upon the structure that we were joining, could not happen without the prior consent of the House of Commons. We were reassured at every stage that we would go only as far and as fast as we could carry Parliament and the public with us.
The process has worked differently. It has been a process that reminds me of Professor Housman's description of a man walking—a person putting forward first one foot and then, "by a strange inconsistency", the other. It has been the alternative movement of the minimalist and maximalist feet. At one moment we were reassured that nothing was really happening and then, a few breaths later, the Government explained how they were building a new addition, a new storey, on the great European edifice.
I shall restrict myself to the striking example of that process that is given in section III of the Blue Book. It is headed "Political Co-operation". Surely political cooperation is not merely harmless but positively desirable between nations, between friendly nations, between nations which, for the most part, although there are exceptions, are allied. What could be wrong, asks the minimalist foot, with political co-operation? If we happen to agree, if our interests happen to march with those of other member States of the Community, surely we should do the same thing. That is all we are talking about. That is all that political co-operation means. But to an increasing extent we come to the conclusion that our interests, points of view and intentions happen to be the

same—surprise, surprise; hurrah, hurrah—and therefore there is Political Co-operation and we do the thing together instead of doing it separately.
That is one side of the coin but there is another, which was unequivocally exposed in the Report on European Political Co-operation that was issued last November and which is referred to in that section of the Blue Book which is before the House. Throughout that report "Political Cooperation" is not in lower case letters. It invariably appears with capital letters as an actual institutional entity. The careful reader both of that report and of the Blue Book will find that that is so. It is stated in the report:
The development of European Political Co-operation over these years has shown that it answers a real need felt by the member states of the European Community for a closer unity in this field".
I shall not waste any time on the inherent contradiction and even ungrammaticality of the words "closer unity", but I shall proceed with the following sentences:
It is a mark of its proven value that European Political Cooperation has steadily intensified and its scope continually broadened. This development has contributed to the ultimate objective of European Union.
That last is what it is about. There is now an institutional framework which is to "contribute to the ultimate objective", taken for granted, "of European union"—institutional union.
That is something different. That is something to which the assent of Parliament and people has not been secured. It is true that two or three months before the ratification of the Treaty of Brussels the Prime Minister of the day, the right hon. Member for Sidcup (Mr. Heath), announced the object of political and economic union by 1980. That date has, reassuringly, gone by. But he had not secured any vote, even in the House, let alone any expression of opinion on that behalf, let alone, to hark back to an old phrase, full-hearted consent from the people. Yet here European union is assumed as an "ultimate objective", and the development of political co-operation is seen as "contributing" to it. So we have moved on. We have moved, in a series of substantial steps, towards the assumed "objective of European union".
The minimalist, or the European in his minimalist phase, might say, "Well, as the EEC is an economic community, there must be some aspects of international affairs which are bound to impinge on any economic community, particularly upon an economic community which, by its structure, absorbs the external trade policies of all its members". For example, it might be argued that if some question arises in foreign policy of using economic weapons—of imposing sanctions, for example—the mechanism of the European Economic Community would be brought into play. One could see an argument being got on its feet that if, in such a context as Poland, Afghanistan or even Argentina, economic action was called for, it would be only natural that the institutions of the Community and the members of the Community should co-operate politically in the economic sphere of international policy.
However, one would not get far with that contention. A study of section III of the Blue Book illustrates that. I shall take two of the three examples that I have given. On Poland the Blue Book states:
The Ten have made their views clear to the Soviet Government and the Russians can be in no doubt that direct intervention would have grave consequences for their relations with the Ten and for East/West and international relations generally.


That may be a correct statement. It may be an admirable sentiment and a desirable policy. But no one could mistake it for a policy deriving from and circumscribed by the economic functions of the EEC. It has become a statement of international policy. Ultimately it has become a threat of the use of not merely economic but other forms of force.
On Afghanistan, the Blue Book stated:
The Foreign and Commonwealth Secretary, in his capacity as President-in-Office"—
not as Her Majesty's principal Secretary of State for Foreign and Commonwealth Affairs—
went to Moscow on 6 July to present the European Council's proposals for a two-stage international conference on Afghanistan to the Soviet Government on behalf of the Ten.
One or two points in that formulation are worth noting. The proposals are the proposals of the European Council, which is a body not provided for nor allocated any functions in the Treaty of Rome. It was not a body that existed when the assent of the House was obtained to our joining the EEC. We find now that the European Council, initially an informal meeting of the Heads of Government of the member States, has become a persona in international affairs, slapping on the table at Moscow, by the hand of Her Majesty's principal Secretary of State for Foreign and Commonwealth Affairs when he is President-in-Office, its proposal for dealing with Afghanistan.
That way lies one of two things—either making a fool of oneself or running into disaster. Fortunately for us, it was the former that happened. We were made a fool of; it was obvious that behind that proposal there lay nothing whatsoever. There lay behind it no intentions; not even the fleabite of economic action lay behind it. It was just the European Council endowing itself with an international persona for the sake of the exercise of building up political co-operation.
One goes on from one instance to another. One can leave the area where any economic factors are likely to come into play for the EEC and find the same thing happening. I take this specimen, for example, from the section on the Middle East, which is rich in instruction:
The Ten heard of the assassination of President Sadat with the greatest shock".
One imagines the Ten sitting there in a row with simultaneous shock as if an electric current had passed through them. However, it was not that ludicrous aspect to which I wanted to draw attention, but to what was said next:
But they were encouraged"—
they cheered up—
by the orderly transfer of power in Egypt and by the commitment to continuity shown by President Mubarak, who has their full support.
Those are not my words, but the words that are printed. President Mubarak has the "full support" of the Ten. What does that mean?

Dr. J. Dickson Mabon: That they support him.

Mr. Powell: I see. It means that they support him. If his regime in Egypt were in any danger, what would be the support? When we talk about support in the House we have a fairly precise idea about what we mean by support: we shall get someone into the Lobby. Into what Lobby will the Ten go in their support of President Mubarak? Either that is nonsense—talking for the sake of talking, chattering for the sake of chattering—or we are making a commitment—or rather a commitment has been made on

our behalf, because I think that we are one of the Ten—to do something to sustain a certain regime and state of affairs in Egypt.

Mr. Tom Ellis: Does the right hon. Gentleman agree that a couple of years ago in the real world Mr. Abba Eban was right to choose the word "bizarre" when he said that he found it bizarre that European politicians should squabble among themselves about whether to support American policy on issues such as Afghanistan, the hostages and so on?

Mr. Powell: I shall come to the larger matter of foreign policy and foreign policy in the Middle East. I shall examine how far the expression "squabble", or "squabble amongst ourselves", is applicable, or ought to be acceptable, to the House. Meanwhile I take another example from the same area:
Four members of the Ten, with the agreement of their partners, agreed to a request from the United States that they should participate in the Multinational Force and Observers in the Sinai.
It says in "the" Sinai, so I suppose it has a definite article. I repeat—
with the agreement of their partners.
This country was among the four which did so. However minimal in physical terms was our participation, a participation in such a force was a significant political and national act. That was done with the agreement of our partners. What does that mean? Does it mean that if we did not have the agreement—the assent to our participation—of Luxembourg or of the rest of what are called the "Ten" we would not have sent our force? Are the Ten acting as a unit to the extent that one black ball disqualifies? Is this already a unitary policy?

Mr. Hurd: indicated dissent.

Mr. Powell: The Minister of State indicates dissent. In that case, what is the meaning of "the agreement" to the action of the four, signified by Luxembourg and the other five? It means nothing at all, if we would have done it anyhow and if it was an independent decision of ours to take part in such a force, right or wrong.
A larger matter is clearly our relationship with the PLO and with Israel. This goes back to the major event that occurred at the European Council in June 1980 which issued the Venice declaration on the Middle East. That was issued by the Ten. It is quoted as evidence of the Ten continuing
to play an active role in the search for a just, comprehensive and lasting settlement in the Middle East".
When that announcement was made, I remember asking the Prime Minister whether this was the foreign policy of Her Majesty's Government or whether it was a collective foreign policy—whether the States had, as individual sovereign States, adopted the policy. I was told, and the formula was repeated again this afternoon by the Minister of State, that this is a concurrence of completely independent sovereign States which all, no doubt after discussion, hit upon the same foreign policy.
So let us consider this, in the terms in which it is propounded to us, as United Kingdom foreign policy. Does anyone seriously suppose that the United Kingdom would, as a matter of United Kingdom policy, have confirmed the assertions of the Venice declaration and in particular would, in the terms of the declaration, have recognised the PLO and committed itself to such statements as


the right to existence and to security of all the states in the region, including Israel
and
justice for all the peoples which implies the recognition of the legitimate rights of the Palestinian people"?
That is repeated again:
A just solution must finally be found to the Palestinian problem … The Palestinian people, which is conscious of existing as such, must be placed in a position to exercise fully its right to self-determination".
Note the word "must". That is a word of power. This is the Ten—Luxembourg and the other nine—saying that these things "must" happen at the other end of the Mediterranean and that these things "must" come to pass. The word "must" is being used. They do not say that such things would be desirable or that it would be an agreeable scene or that mankind would rejoice if these things happened. They announce with the verb "must"—if "must" is a verb—that this is what is to be made to happen. There is an implication of the use of power behind those words.

Mr. Maclennan: rose

Mr. Powell: Is the hon. Gentleman simply uncomfortable or does he wish to intervene?

Mr. Maclennan: Not uncomfortable, but increasingly puzzled. The right hon. Gentleman is speaking about a procedure of international consultation which is not novel and not confined to the European Community. We have seen it as recently as in the resolutions of the Security Council in its collective denunciations of the Argentine. The right hon. Gentleman made no complaint about the fact that the British Government fully participated with others in coming to mandatory resolutions in which the word "must" was employed.

Mr. Powell: I am obliged to the hon. Gentleman. He has advanced my argument considerably. We took a decision as a nation and as a Parliament to join the United Nations and accepted the terms of membership. Whether or not we should have done so, we did. That was a conscious and deliberate decision, debated and taken in the open. The Venice declaration is not the result of any such decision, either of the House or of the country. This excrescence or cancer is growing of its own accord. The Blue Book bears witness, as does what is called the London report on political co-operation, to such a growth.
Therefore, are we concerned with a new mandatory body? I am obliged to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for his interpretation of the word "must". Is this to be another mandatory body to which we shall presently find that we shall belong by no volition of the House or country?
I do not believe that it would have been possible for any Government to persuade the House that it was right, or necessary, for the United Kingdom to attach itself to those far-reaching propositions—contradictory and, in some respects, ill-defined as they are—end to change its stance in relation to the PLO. Even after debate in the House, I do not think the Government would have succeeded in doing so. Certainly they would not have dared to do so without the authority of the House behind them.

Mr. Hurd: The right hon. Gentleman is labouring mightily to produce a mouse. We combined voluntarily on several occasions with others in Europe to produce joint statements, or joint initiatives. One may criticise the

merits or the phraseology of this or that example, but it is a voluntary effort that increases in scope because we find increasingly that this is the way to exercise influence. If we had not agreed with the terms of the Venice declaration, my right hon. Friend the Prime Minister would not have put her name to it. We did not have to agree, but we did. The sentiments in that declaration have been repeated ad nauseam from the Government Front Bench since the declaration was made by my right hon. Friends the Prime Minister and the Foreign Secretary as British policy.

Mr. Powell: The Minister of State has not taken the point or appreciated the seriousness of what is happening. Are we being told that these are the congruent policies of ten independent sovereign States and that this, therefore, is the policy of Her Majesty's Government, or are we being told that this is a policy that ought to be acceptable, or perhaps a policy that is practicable, because it has been simultaneously adopted by the Ten? That is the first question. Is the declaration commended to us as inherently right and sound for the United Kingdom as a sovereign State, or is it commended to us as something upon which the ten States of the EEC, whose modus of association has nothing to do with the Middle East, have been able to agree at the Venice summit?
The second and more serious point is the relationship with this House. It is to that that I was tending and on which I wish to conclude. It is because these decisions, announcements and initiatives—to use the Minister of State's word—are undertaken collectively by the Ten that the House finds itself in the position to which it has become accustomed—confronted with the result of a collective bargaining operation, either in the European Council or in the Council of Ministers—of being told, "You cannot unpick this now." That is very different from the exercise of the known and the understood prerogative on behalf of Her Majesty by the Government. The Government have an undoubted right to take a decision in foreign policy, even a decision of war and peace, and then submit themselves to the judgment of the House and, ultimately, of the country.
But that is not what is happening here, that is not what happened with the Middle East. The Government did not say "We propose a new initiative in the Middle East which we shall back with all the authority, moral and whatever else we have, of the United Kingdom, and if necessary behind which we shall align ourselves in practical ways. This is what it is. We want to tell the House of Commons what it is. We want your approval and support for it." In those circumstances, it seems to me extremely improbable that this House would have given its assent to that sharp, grave and far-reaching departure which happened as a result of a few paragraphs added to a communiqué of a meeting of the European Council.
Everything which is gained by the European Community is lost by this House. That is axiomatic. What the Community gains in authority, what it gains in institutional strength, what it gains in development, is so much taken away from the control of this House, and therefore from the control of the people of this country.
What I am saying is that Political Co-operation—with capital letters—in an institution which is designed to contribute
to the ultimate objective of European Union


has its natural consequences. European union in the end means, by definition, the obliteration of the self-governing institutions of the United Kingdom. Under our noses, without so much as a by-your-leave—except that we get a "take note" motion, with an amendment to the motion—that process is going on month after month and year after year. It is time for us to say "Stop".

Mr. Roger Moate: The right hon. Member for Down, South (Mr. Powell) is right to draw our attention once again to the many instances in which we can discover, in document after document, words which lay down ultimate objectives of European union or such things as a European foreign policy. The fact that we then get denials from the Government Front Bench that such an objective exists, or statements that it is impractical, does not alter the fact that those words remain there and remain apparently as objectives.
I thought that the concept of a European foreign policy, if it has any meaning at all, was undermined, not enhanced, by our experience with the Falkland Islands. It was welcome at the outset of the crisis that a number of European nation States supported our objectives. Indeed, that was as it should be, because I trust that they, too, share our belief in democracy and our opposition to aggression and tyranny. But I am sure that my right hon. Friend the Minister of State, certainly the Foreign Office and certainly the House a week later, when the Community faltered and there was not the full-hearted renewal of the sanctions, felt a sudden and fundamental change of mood throughout the House and country.
I did not believe that the feelings in the House about the Community would ever be the same following the moment when the Community failed to renew the sanctions, except on a weekly basis, and when two members of the Community opted out of those sanctions. It is impossible to describe that as a Community policy on behalf of all the members of the Community when one of them, Italy, opted out, on the reasonable ground that it had a large number of its nationals living in the Argentine and, more significantly, when Southern Ireland opted out on the ground of neutrality. How is it possible to conceive of a Community producing a single foreign policy when one of its members professes neutrality? It can only work, presumably, if we are prepared to compromise on neutrality or to become neutral ourselves. I was reassured by Southern Ireland's pronouncement of its position, because it seemed to me to put paid, at least for the time being, to the extraordinary objective of a Community foreign policy.
The Government's motion asks us to take note of the period of our Presidency. It was a period which was not particularly noteworthy, so the motion is hardly controversial. But the Opposition have tabled an amendment which, by rejecting the Treaty of Rome, as the hon. Member for Liverpool, Walton (Mr. Heffer) accepted, effectively means withdrawal from the Community.
Several of my hon. Friends and I tabled an amendment which has not been selected, but perhaps I may refer to it as an expression of opinion. Had we had more notice of the Opposition's amendment, I suspect that, rather than having seven or eight names on our amendment, we could

have got 40 or 50 names. It was an expression of opinion which effectively rejected the likelihood—or indeed the desirability, as expressed on the Order Paper—of withdrawal from the Common Market, but it called for fundamental reform. I am glad that the Opposition have tabled their amendment, because it allows us to express our point of view very clearly.
The Government have frequently referred to the need for fundamental reform, but I regret deeply—and the words of my right hon. Friend rather confirm the feeling—that, while the words "fundamental reform" might come well from the Prime Minister, they do not seem to be supported very strongly by the Foreign Office, by the Ministry of Agriculture, Fisheries and Food, or by other Government Front Bench spokesmen. I believe that the demand for fundamental reform is widely supported in the House and throughout the country, but I do not believe that at present the Government have in hand the necessary plans to secure the fundamental reform to which they are—or were—committed.
I should like to explain why I think that withdrawal from the Common Market is no longer a question of practical politics or a reality. The Labour Party may well adopt that as its official policy, but it is interesting to consider the experience of the Greeks. One of the paramount considerations in their general election was the proposal that Greece should have a referendum on withdrawal from the EEC. The election was won partly on that proposition. Has Greece withdrawn from the EEC? It has not withdrawn, and the likelihood of its doing so recedes all the time. I suspect that exactly the same experience would be encountered if, as is most unlikely, we were to have a Labour Government elected at the next general election.
I suspect—and I believe that this feeling is shared by many sceptics on the Labour Benches—the right hon. Member for Ebbw Vale (Mr. Foot), in his splendid duffel jacket, would go up the steps of the Elysee Palace and would, before long, be hand in hand with his Socialist friend, President Mitterrand, or his friends in West Germany or elsewhere. I suspect that a Labour Government would soon find that there was a necessity to co-operate and work together, and that they would begin a period of renegotiation which might or might not be meaningful.
I suggest that the likelihood of withdrawal from the EEC, under a Labour Government—even if that proposition were supported by the Labour Party at a general election—would be very remote. Therefore, let us forget about it.
It is a fact of life that we have joined the Community, so let us look for fundamental reform. Let us try to reform the Community and ensure that Europe co-operates on the meaningful basis of free nation States. I do not believe that the present position of the Government or that of the Opposition is likely to produce the result that the people want.

Mr. J. Enoch Powell: I am following the hon. Gentleman's argument very closely, but there is a link which seems to be missing in his argument. He says that there should be a demand for a fundamental reform but if there is not the certainty of obtaining that fundamental reform, the consequence of withdrawal from the EEC must presumably follow.

Mr. Moate: I understand the right hon. Gentleman's point fully, but there is no certainty in life. All we can do is to try to secure the best we can. The Labour Government were in office for many years and there was no withdrawal from the Community. The right hon. Gentleman will be the first to admit that he is now sitting on the Opposition Benches rather than on the Government Benches because he believed that there was a prospect of the Labour Government taking us out of the Community. It did not happen, and I believe that it will not happen. Therefore, we must look for fundamental reform. In response to the right hon. Gentleman's point, I suggest that the best bet we have for getting the fundamental reform that we want is in the person of my right hon. Friend the Prime Minister. My right hon. Friend will not achieve that fundamental reform unless she gets much stronger support from the Foreign Office and the Ministry of Agriculture, Fisheries and Food.
My right hon. Friend the Minister of State dealt with some of the questions of reform. He at least acknowledged that some of us are asking for a reconsideration of our membership of the Community in terms of the CAP and other matters. He dealt with it superficially. I should like to know whether a proper study has been made of the consequences of changing the nature of the common agricultural policy. He said that figures had been produced. I should like a Government study showing the consequences of not having a common agricultural policy as presently envisaged. I suspect that there is no readiness in the Foreign Office to concede the possibility of fundamental change. That is why I laboured the point earlier about the limitation on own resources.
What is our leverage to secure the reform that most of us wish to see? If withdrawal is not an option—I believe it is not—what are we left with? I thought that we had the power of veto, which is an extremely powerful lever. I shall return to that later in my speech. If we do not have the power effectively to block progress in the Community by use of the veto, our position will be undermined and it will be much harder to secure the reforms that we need.
Another lever is own resources. It is not a strong lever, because the Community could carry on, although unsatisfactorily, within its existing resources. It would not work well, but it could continue. In practice, given the ambitions of the Community, that limitation would produce some change. However, from what my right hon. Friend said I suspect that there is no determination by the Government to deny the Community additional sources of revenue. I am extremely concerned about that aspect. I hope that my right hon. Friend will reaffirm what my right hon. Friend the Prime Minister said to me in answer to a quesion some time ago—that there is no question of providing additional resources and that there is no question of increasing the 1 per cent. value added tax.
I turn now to the veto and the Luxembourg agreement. The House and the country are entitled to a clearer, fuller and stronger explanation from the Foreign Office about its present position and intentions with regard to the veto. We entered the Community with the understanding that we had the right to veto matters which we believed affected our national interest. There is no doubt that it was left to each country to judge what it felt to be in its own national interest. the Luxembourg agreement, which was so fundamental to our membership and to our ability to defend our national rights, was swept away last year in a most offensive and deliberate manner. My right hon.

Friend the Prime Minister and even my right Friend the Minister of Agriculture, Fisheries and Food, who is not known for his antipathy to the Community and its institutions—

Mr. J. Enoch Powell: Recently.

Mr. Moate: Perhaps the right hon. Gentleman is right. There were early days when he was more critical. Both of them spoke angrily about the way the Community had behaved. Since that date we have not restored the position, and we cannot pretend that we have restored it. If next year we were to be faced with an identical situation with regard to farm prices and the linked question of the budget, other members of the Community could do again exactly what they did this year. They could use their votes and override the British veto.
The position has not changed. Have we lost the veto completely? My right hon. Friend said that there was a further debate on that matter and that there was a further disagreement. The majority agreed with us and the minority disagreed with us. So we have this further disagreement about the original agreement to disagree. It is hardly satisfactory if that is what we are left with to defend our national interest. Bearing in mind the comments made by the Prime Minister and others, we are entitled to an assurance from the Government that they will seek a reinstitution in some form or other of that right of veto.
I should like to remind the House of how clearly that right was expressed. In the debate on the European Communities Bill, the then Chancellor of the Duchy of Lancaster said:
But assuming that a question arose on which there had been strong feelings in this House, prima facie it would be a matter in the national interest and a British Minister would have power to insist in the Council of Ministers that it was a matter of major national importance which required a unanimous decision and that he could not be part of that unanimous decision."—[Official Report, 15 Februay 1972: Vol. 831, c. 277–78.]
That is what we were told on the Floor of the House, and that has been completely thrown away. There is no evidence that the British Government are now fighting hard to restore that right of veto.

Mr. Spearing: I have listened to the hon. Gentleman's argument closely Is this not also of great relevance to his plea for and belief in the possibility of reform? If, indeed, changes can be effected by a majority decision against the interests of Great Britain, then, as the hon. Gentleman said, we want the reintroduction of the veto. But the veto would also be available, if it were reintroduced, to those who wished to stop the reforms that he and Britain wants. Does that not illustrate an irreversible movement, to which the Minister of State inadvertently referred in his opening remarks, that reform is impossible, and that withdrawal is the only way to protect Britain's national interests?

Mr. Moate: Withdrawal is not an option. Therefore, we have to find another way of seeking reform.

Mr. Spearing: rose—

Mr. Moate: I believe that there is an alternative and that that alternative will eventually be forced on the Government of the day by the wishes of the British people and the majority feeling in the House, certainly on the Conservative Benches. We shall have that reform. Ultimately we will amend the Treaty of Accession in such a way as to make it acceptable. The pressure will come not only from this House. It may come from France, which is


just as assertive of its national rights. I suspect that in time France will find the Treaty of Rome does not meet its ambitions.
I do not want to hear the Government say that they will try to achieve an entrenchment of our veto powers by accepting something akin to the Genscher-Colombo proposals. I was alarmed to hear my right hon. Friend say that we must go along with the Genscher-Colombo proposals for European union because contained therein is a clarification of the voting procedures.

Mr. Hurd: I did not say that.

Mr. Moate: My right hon. Friend said that he did not say that. I do not think it is unfair to say that that impression has been given. Even taking that point, those proposals do not restore the veto position as it has been understood through the Luxembourg agreement. Even if it were, I suggest that we should not accept the Genscher-Colombo proposals in any form. That would be totally offensive to the philosophy and spirit of this country at this time.
It worries me that sooner rather than later the Government will say that this proposed act of European union—that is one of the phrases used in the explanatory memorandum—will be accepted. As it will be not a legally binding document, which means the veto will not be entrenched anyway, but just an aspiration and an expression of ultimate objectives, the House may not have an opportunity to accept or reject it.
I wish to emphasise why I find the document so alarming and alien to the wishes of the British people and, indeed, the British Government. If the Government were to accept it, I believe that they would do so only in the usual sense of compromise within the Community.
The explanatory memorandum on the European Community document states:
The preamble reaffirms the commitment to create a United Europe through the progressive construction of European Union on the basis of the Community Treaties … The Government have welcomed the basic aim of the initiative, which is to give a new political impetus to the European Communities and to European Political Co-operation.
This document is very grand in its European objectives. It states:
The Government will approach the new text with a view to securing provisions satisfactory to the United Kingdom on these points".
The impression is that the Government seek changes of detail, but will accept the document in principle. The document is riddled with expressions of view which, in my opinion, are not supported by the vast majority of Members of Parliament—and I mean the vast majority, including the dedicated supporters of the Community.
As an illustration, I refer back to the statement by my right hon. Friend the Minister of Agriculture, Fisheries and Food, when he reported to the House that we had lost our power of veto on farm prices. I shall quote what he said in a moment, because it links with paragraph 2.4 of this document about the commission:
The Heads of State or Government underline the particular importance of the Commission as guardian of the Treaties of Paris and Rome and as a driving force in the process of European integration. They confirm the value of making more frequent use of the possibility of delegating powers to the Commission within the framework of the Treaties.
Are we really to accept a document that enhances the position of the Commission

as a driving force in the process of European integration"?
I do not know who would accept that proposition. I wonder whether it appeals to my right hon. Friend the Minister of Agriculture, Fisheries and Food who, in his statement on 19 May, said:
Together with Denmark and Greece we strongly protested when the Presidency, encouraged by the Commission, announced that for the first time since 1966 the principle of obtaining unanimity where a very important national interest had been invoked was to be violated".
Further on he said:
I placed it on record that I considered that the conduct of the Presidency of the Commission and the member States who had joined in this procedure had created a very sad and damaging day in the Community's history".
Finally, he said:
With regard to the role of the Commission, over the whole period of the Luxembourg compromise since 1966 it has been no secret that the Commission has always been opposed to it and has been in favour of majority voting. The Commission did everything it could to encourage those who were using that device yesterday".—[Official Report, 19 May 1982; Vol. 24, c. 352–56.]
Is it not extraordinary that the European Civil Service should adopt such a positive role in the formulation of the constitution of the Community and in policy making in the Community? I regard that as totally offensive. Many people seem to accept it as a matter of course. That is their concept of the European Community. I regard it as abhorrent that the Commission should adopt such a role. Nevertheless, it has that role and power. I hope that the House will not accept documents which seek to enhance the Commission's position
as a driving force in the process of European integration".
That is what we could be landed with if the Genscher-Colombo proposals are used as a vehicle to restore the previous position on the veto.
There are many issues on which I could speak, but in fairness to the House I shall not do so. However, I want to make one or two points in connection with this document. We are now approaching the budget renegotiations, and the House and the country will judge the Government as a whole on the outcome of those negotiations. We should remember that my right hon. Friend the Prime Minister proceeded—somewhat in disregard of Foreign Office advice, according to the newspapers—with a determination to secure a substantial return to this country, and she won. I hope that in the next round of budget negotiations she will not be impeded by others who, for the sake of Community good will and European co-operation, will say "We had better not go too far." It is vital that we are not faced next year with the prospect of paying £500 million, £600 million or £1,000 million. That is what the amount could be. I wonder whether my right hon. Friend the Prime Minister has the backing of her colleagues and the determination to use every possible leverage that this country has to secure a major and permanent change in the budgetary arrangements.
I conclude by saying again that fundamental reform is vital. That fundamental reform will come only through a positive determination by the Government expressing themselves clearly in favour of it. We must get away from vague expressions of Community and European union, and the like, and get down to the realities of political bargaining.

Mr. David Myles: I am interested to hear my hon. Friend's advocacy of fundamental reform, but he


gives no guidelines for that fundamental reform. We cannot have a reform until someone spells out exactly what the reform is. It is easy enough to say that we must have reform, that something is wrong, but it is difficult to achieve reform unless it is spelt out. Will my hon. Friend try to spell it out for us?

Mr. Moate: Much has been going on in the past few years of which my hon. Friend is apparently oblivious. Documents have been produced setting out clearly what we believe the reforms should be if we are to change the basis of the Community. It would be unfair to spell out those proposals in detail now, but fundamental reform is certainly attainable. I hope that the treaty will be changed immediately to remove the powers whereby the Community can make laws which are directly binding on this country. I do not believe that such a simple reform would break up the Community.
On economic policy, the common agricultural policy should be totally recast on the basis of individual national agriculture policies that could well be supervised and co-ordinated, if necessary, by the Commission. Sooner or later we shall have to get away from the present CAP. I believe that we should start afresh and get back to something approaching the original system that worked so well in this country. There will be many proposals.
I only wish that the Government would say that they were examining fully and properly the many alternatives that are available. At the moment, unfortunately, we seem to be stuck in the trench warfare of years ago. If we criticise the Community, we are told that we are trying to break it or that we want to get out. That is not true. I hope that my right hon. Friends will at least recognise the sincerity of those of us who say "We want fundamental reform. We are not advocating withdrawal from the Community, but we must have fundamental reform." The British people will stand for nothing less than that.

Mr. Nigel Spearing: I understand the calls from the hon. Member for Faversham (Mr. Moate) and his hon. Friends for fundamental reform. I understand, too, why the Government and those who assist them find it increasingly difficult to obtain those reforms. However, I shall not pursue the matter, because I am afraid that the machine is wound up in such a way that it was intended that they never should. I shall come back to that subject at the end of my speech.
The Minister of State emphasised some of the advocacy of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) without referring to the words of the amendment. The words in the amendment are clear. They assert that we are not getting any advantage from the policies set down there, and that the Treaty of Rome is an unsuitable basis for "fruitful co-operation" between this country and her European friends and allies. The Minister made no attempt to dispute the assertion that the
arrangements for the Budget, Agriculture, Fisheries and Food are contrary to the interests of the United Kingdom".
Not once did he contest that assertion. Nor, I believe, will any other hon. Gentlemen do so in this debate. If they do, I shall be extremely interested to hear the grounds on which they attack the proposition contained in the amendment.
I am sorry that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) is not here—nor the right hon.
Member for Sidcup (Mr. Heath), nor the right hon. and learned Member for Hexham (Mr. Rippon), nor the hon. Member for Reigate (Mr. Gardiner), all of whom asserted to the contrary. They are not here to attack the assertion made, justifiably, in the amendment.

Sir Anthony Meyer: I cannot participate in the debate because I am having dinner with Mr. Speaker later. I have frequently argued the proposition that the hon. Gentleman claims no one will argue, as have many of my hon. Friends. Although there are serious defects in the budgetary policy and the common agricultural policy, on balance the United Kingdom gains from them. I am prepared to argue the point at any opportunity.

Mr. Spearing: I did not mention the hon. Member for Flint, West (Sir A. Meyer) but I suggest to him that each matter put down here is quantifiable. The next time that he makes a speech, I shall listen to his arithmetic. He cannot assert that the effect of either of those matters or of the balance of trade is in the interests of the United Kingdom. He and his hon. Friends always introduce extraneous philosophical factors that are non-quantifiable. Although they are important, they do not add up to the interests of this country.
The hon. Member for Reigate should be especially worried about the economic effects of entry of the EEC. There was an exchange earlier about employment and jobs at risk. Those who said that jobs would be at risk at the time when we entered the Common Market were presumably arguing against our entry. But Conservative Members who advocated entry took no notice of the risk to jobs then. The word "risk" is used frequently, but the figures show clearly that there is a £3 billion deficit in our manufactures balance of trade with the rest of the EEC. Many jobs have been lost because of that deficit. No Conservative Member could deny that, not even the hon. Member for Flint, West, many of whose constituents in the steel industry lost their jobs as a consequence of the deficit.
Reference was made to enlarging the Community budget and an important exchange took place between the hon. Member for Faversham and the Minister of State. In trying to redress the agricultural balance, the right hon. Member for Hillhead and others say "Spend more on the regional fund and economic aids". It is curious that Conservative Members, who are against public expen-diture, should wish to redress the balance in that way, forgetting that, in doing so, they must raise the money with which to do it.
The Government will be forced to agree with the rest of the Community to enlarge the budget in some way as a quid pro quo for getting some benefit for Britain either in the fisheries negotiations or in the budget negotiations. That is the one thing on which the Government can give way and the one thing on which the Community will ask them to give way. The Commissioners have publicly advertised the possibility of an oil tax.
We must face the possible enlargement of the EEC budget, again at the expense of the taxpayer, not for expenditure that we can decide in the House during an Estimates review but for repayments to Britain out of the Brussels budget, the nature of which will be decided by people in Brussels for people in Brussels and according to their priorities. If the budget is enlarged and we obtain a fair balance, it will mean loss of power to the House and the country.

Mr. Marlow: If any such additional tax which is payable into the European kitty were to be agreed, the Government would promote it in such a way that it must be passed by the House. Surely the hon. Gentleman is not suggesting that the Government would promote it in such a way that it need not go before the House. If it were to pass before the House, is not the hon. Gentleman fairly confident, as I am, that it would not be agreed?

Mr. Spearing: The hon. Gentleman has uncharacteris-tically failed to remember a major feature of the Treaty of Rome that we claim fails to provide a basis for
fruitful co-operation with the United Kingdom's European friends and allies.
He will correct me if I am wrong, but is he not aware that the European Council, in pursuit of its common economic policies under article 3 of the treaty, could impose a common tariff on oil entering the EEC? That would have the effect of increasing energy costs and notionally increasing the book value of North Sea oil. It would create taxation in Britain, and the House could do nothing about it because the proposal would come direct from Brussels.
The powers of Brussels are even greater than the hon. Gentleman believes, because the Commission could impose such a tax unilaterally, without any debate in the House of Commons. We may try to discuss the matter, but no decision of the House would be required. It is an example of the creeping competence of those who wish to have a European State. Sometimes those who speak from the Dispatch Box also advocate that policy.
Pages 16 and 17 of the White Paper list agricultural items, but there is no reference to cereals. However, on 19 July, in a written answer, the Minister of State set out a table that shows where the surplus of grain from Britain has been sent. That may surprise some of those who did not know that we had a surplus of grain. The common agricultural policy distorts the proper agriculture of Britain, as was brought out in an intervention by the hon. Member for Holland with Boston (Mr. Body). In 1980 Britain sent abroad 2,900,000 tonnes of surplus cereals. No less than 1·5 million tonnes were sent to Eastern Europe, 1 million to Poland and 600,000 to East Germany. That was not normal trade but was carried out with the help of export subsidies that are paid for by the British taxpayer. That assistance cost about £18 million for Poland and about £21 million for East Germany. Although the taxes on that are sent to Brussels, it counts against what Britain spends. When we work out in the EEC budget the "cost to Britain", we must include the £40 million that the intervention board shells out for the export of surplus British grain to Eastern Europe. That fact may shake even those who support the agricultural policy. I hope that it shakes the hon. Member for Flint, West and perhaps he will tell us so in a later debate. If he is not shocked, perhaps he will tell us why.
I understand that the New Zealand butter quota is to be reduced from just over 90,000 tonnes to 89,000 tonnes because of lower butter consumption in the Community. That is not surprising because it is so expensive. I also understand that one of our European "partners" wishes to reduce the quota still further to 60,000 tonnes. Many of them would want to phase it out altogether. I do not believe that many of those who support our EEC membership would want to see that. However, that is the result of our membership and that is the sort of pressure that is being put on us all the time.
I do not need to refer much to fisheries because we had that debate last week and the Minister of Agriculture, Fisheries and Food more or less had to admit that he could only try to get the best deal that he could, but that he had no bargaining power to do so. It looks as though we shall have a bad deal about which we can do nothing because the veto, such as it is, is not in our hands, but in those of other parties.
The budget repayments have been agreed for one more year and the Minister agreed that that did not present a good picture. We shall come back in another year and ask for another extension. As I said in questioning the Prime Minister a few months ago, we have become a client State of the EEC. If we are a client State, we have to do what the other States say. That means that time after time, when we return to the EEC in all these respects, we have to do what it wants.
All this means that we are moving ever towards the state of a European union. The hon. Member for Faversham pointed this out well in his comments on the Genscher-Colombo proposals. At some stage, we shall be asked to assent to some aspects of those proposals, and we shall have to choose between that and not having a continuation of our budget repayments. Make no mistake about it, because of the increasing costs of the CAP, there will have to be some change in the way that the budget is built up in succeeding years.
I fear that the movement towards a European union, both in respect of internal policies and prices, and its effect on external policy, as expounded by the right hon. Member for Down, South (Mr. Powell), will inevitably go forward. The machine will be set up in that way to achieve that purpose. It has inbuilt ratchets that progressively destroy the power of the House and with it the power of the British people to make their own choices.
I agree that in this world we are interdependent and cannot say that we go it alone in every respect. However, we should have the power in this place to decide the balance of advantage on the merits of the case before us. We are increasingly unable to do so because policies that are the concern of people at every stage and level of production and in every part of our society are increasingly being taken out of our hands and put elsewhere, particularly in Brussels.
Therefore, when we are invited to take note of this report, we should take note that at every stage the movement is of power away from the House towards Brussels. The only way that we can arrest this movement is to do as our motion implies and get out of the EEC.

Sir Anthony Meyer: For a number of reasons I shall be brief, but I should like to have this opportunity of saying a few words. This is not the speech that the hon. Member for Newham, South (Mr. Spearing) called for, in which I quantify the case for our staying in the EEC. However, I make the point that was originally made when we applied to join. The benefits of joining are difficult to quantify but almost certainly larger than the benefits of staying out, which were easily quantifiable. That still remains the position.
Various hon. Members have made our flesh creep with the awful consequences of our being a member of the EEC. It is easy enough to make the case against membership, even if the case that has been made by Labour Members is full of holes, and if I had more time


I should try to demonstrate that. It is simply not enough to make the case against membership. One can say that as members of the EEC we have had an adverse balance of trade and manufactures, but those who say that always leave out oil, for reasons that I cannot understand.

Mr. Marlow: rose—

Sir Anthony Meyer: I shall not give way to my hon. Friend, who always interrupts everything. Oil is the result of exploration that has involved large investment.

Mr. Marlow: rose—

Sir Anthony Meyer: I shall not give way. Oil has to be assessed with everything else. We have a favourable balance of trade. Even if, to give my hon. Friend his point, we deal only with manufactures, the balance of trade, adverse though it is, is better covered by our exports to the EEC than is our trade with other major advanced countries such as the United States or Japan.
It is true that our subscription has represented a drain on the resources of the country. To put that drain into perspective, even at the rate at which it was running two years ago, it still represents only £10 per inhabitant. That is an appreciable sum, but not a crippling one.
We always hear about loss of sovereignty and the creeping advance of the European union, but it does not look like that from Strasbourg or to any dispassionate observer. On the contrary, the dispassionate observer is impressed by the increasing loss of momentum towards any kind of European union.
Even if it can be demonstrated that the balance of our trade in manufactures is adverse, that the subscription is intolerable and that we are losing some mythical sovereignty in a world in which interdependence is more clearly defined than ever before, the case is still not proven. Two further things have to be shown. It has to be demonstrated that there is a better, more satisfactory and more profitable relationship for this country with the EEC than is provided under the present arrangements, and one that will guarantee us a market for our exports, relieve us of the obligation of paying for dear food and enable us to find assured supplies of food on a dodgy world market.
That is hard enough to demonstrate, but even if one could—I have yet to hear any hon. Member on either side of the House give a convincing alternative to our membership—it then has to be demonstrated that we have the bargaining strength to achieve it. Let no hon. Member try on me the theory that the other EEC countries are so dependent on our market that they cannot possibly afford to see us pull out. There is no EEC country other than Ireland for which this country provides a substantial export outlet. That may be the case for the EEC as a whole, but for the individual member countries, apart from Ireland, 7 per cent. is the largest proportion of exports that we represent.
The true strength of our bargaining position in the EEC is that if we pull out we begin a process of disintegration of something that seems to me and to many other hon. Members the most hopeful experiment in international relations that we have seen for a century or more. If that is the strength of our position, we should have scruples before using it.

Mr. Ronald W. Brown: I am pleased to follow the hon. Member for

Flint, West (Sir A. Meyer), because I concur with his views. I am not a student of these debates. Whenever I hear one of them coming, I find myself something else to do, usually in my constituency. Today, I have been asked to be present and take part in the debate. I have always read the debates with keen interest.
The hon. Member for Flint, West was right when he said that nobody had yet advanced any alternative to the EEC. The hon. Member for Liverpool, Walton (Mr. Heffer) started talking about cheap food, but stopped, and we did not find where the cheap food was, where it was coming from and whose standard of living was depressed so that we should have that cheap food. If one wants something for nothing in this world, somebody has to give up something. We have never yet had it explained to us where the cheap food would come from.
I am delighted to see the hon. Member for Faversham (Mr. Moate) coming into the Chamber. I followed his speech tonight and, as always, it was extremely interesting. I normally read the speeches of hon. Members, but today I have listened in person. They are usually all much the same, but the hon. Member for Faversham updates his and that is his great asset. One hears a little extra each time he speaks.
The hon. Gentleman pinpointed a major issue upon which he finds himself in disagreement with the official Opposition. He spoke of the intervention by the hon. Member for Bolsover (Mr. Skinner) in the speech of the hon. Member for Walton asking him to address himself to the amendment tabled by the official Opposition The hon. Member for Bolsover clearly asked why his hon. Friend did not say what was said at the Labour Party conference, namely, "We are coming out". The hon. Member for Walton then did a pas de deux about five times. I am not sure what he actually said, but he did not say "Yes, that is the position." Perhaps the hon. Member for Greenwich (Mr. Barnett) will say "Yes" in answer to his hon. Friend the Member for Bolsover, because that is exacly what he means.
I want to address myself to three areas of the Blue Book, Cmnd. 8525. Paragraph 9.2 is one that I find particularly interesting. It refers to a paper published by the Commission on new technology and social change. That is certainly a matter of great importance to Britain. It says:
All were agreed on the need for a coherent Community wide strategy for new technology but views were divided on a claim from workers' representatives for statutory rights to information, consultation and negotiation when new technology is introduced.
The House is entitled to know the Government's attitude to that issue. Were the Government one of the dissenters referred to? With 3,200,000 registered employed, there can be little doubt that the Government must be aware of the dangers of any changes in new technology that are proposed in Britain. Therefore, I should like to know the Government's attitude to the proposed directive on workers' information and consulta-tion in large companies.
I understand that the initial reaction of the 10 Community Governments has been surprisingly favour-able to such a directive. Asking around, as they say, I am given to understand that only the United Kingdom virtually dissented. I am told that the Commission's proposals were challenged and that the vast support for the business lobby came from the Secretary of State.
Obviously, the multinational companies need to have the mandatory requirement as put forward by the Commission. The Commission's proposal would make it mandatory for multinational companies to inform their work forces of any key developments in the operations of their subsidiaries. They will have to consult the workers' representatives where the interests of the work force are at stake.
Not surprisingly, almost all the business organisations in the Community have come out against the proposal, while—equally not surprisingly—the trade unions have come out in favour of the proposal. The Secretary of State for Employment was apparently the only Minister of the Ten to express direct opposition to the directive.
These discussions all take place at closed meetings, so that one is only hearing, as it were, from people alleging to be there. It is said that the Secretary of State claimed that the Community should rely on a voluntary code, but that he was firmly told by the French, the Germans and the Danes that experience shows that a voluntary code does not work. The German view was that, while voluntary codes may work under national legislation for national companies, they were wholly inadequate for multi-national companies. The Danes took the same view. Therefore, it is important that the Minister should tell the House the Government's attitude.
In paragraph 9.3 it can be seen that the Standing Committee recognised that certain other actions were needed, particularly
the training and retraining of teachers, the use of technology to aid the handicapped, the improvement of technical qualifications and the demonstration of the employment potential of new technology to small and medium sized firms.
If ever a country has many teachers who need training and retraining, Britain has, but that is not the attitude of the Government. We should hear tonight what the Government have to say about that.
Paragraph 10.4 relates to the paper on energy strategy. I am one of those who have always believed that we should work towards a common European energy policy. So far, that has always eluded us. I recall my time on the Energy Committee of the European Parliament when we strove manfully to develop a common approach. The nearest that we got was when the right hon. Member for Bristol, South-East (Mr. Benn)—the then Secretary of State for Energy—committed all the United Kingdom oil to the International Energy Agency for its emergency oil scheme. For the first time, one Minister out of the Nine made a positive contribution to the concept of an energy policy for Europe.
Does the Minister confirm that view today? Does he approve of the action of the right hon. Member for Bristol, South-East, and is that still Britain's position? Have we assigned all our oil to the IEA emergency oil scheme? Is it the Government's intention to take the lead in achieving a more effective energy policy within the Community? If so, what steps will the Government take to achieve that? There are few countries better placed than the United Kingdom to lead a fight to obtain a common policy. We are a major oil, coal and natural gas producer. Therefore, it is right that we should do the best we can for our partners in Europe.
I should also like to press the Minister on paragraph 9.11 relating to the anti-poverty programme. To dismiss that vital subject in four lines hardly does justice to it. The recent study on poverty in Europe has established that 30

million people live in poverty in the Community. That number is increasing as unemployment increases. Therefore, the scope of the problem becomes frightening.
The massive increase in the number of unemployed has added to those who are classified as the traditional poor. The burden of the economic crisis has fallen dispropor-tionately on the unskilled, the young, the immigrants and those with mental or physical disabilities throughout the Community. Therefore, there is a need for member States to establish as a political priority an anti-poverty Community action programme. It is incumbent upon the Minister to tell us tonight exactly what he and the Government have in mind.
It is insufficient for the Government to give platitudinous replies, saying that they are concerned. Everyone is concerned. Hon. Members are entitled to ask what the Government are actually doing. It is disgraceful that the document should contain nothing more informative than paragraph 9.11, which shows virtually no interest whatever. The paragraph indicates that Ministers have not read their own report, which ranged over the previous five years. The Minister must say what action the Government propose to take about poverty. It is becoming an increasing difficulty in our own country.
I hope that the Minister will be able to say what the Government are doing individually and together with our partners to come to grips with this enormous problem of poverty. The evaluation report to which paragraph 9.11 refers states:
To postpone action is to risk damage to the social fabric which could last a generation".
It ends by asserting:
The case for resolute action does not rest on any crude calculations of costs and benefits. It rests on equity, compassion and solidarity.
Hon. Members are entitled to expect full support from the Government in bringing forward urgent programmes to deal with these important problems.

Sir Nicholas Bonsor: I cannot recall the identity of the person who remarked that if one wanted to keep something secret the best method was to make a speech in the House of Commons. I feel sometimes that there is a great deal of truth in the statement. If, however, anyone gets round to flipping through Hansard and finds my speech, I hope that he will also go back a few pages to find the speeches of the right hon. Member for Down, South (Mr. Powell) and of my hon. Friend the Member for Faversham (Mr. Moate).
My remarks are consequential upon points already made. I endorse wholeheartedly the reservations that have been expressed about the Treaty of Rome. There can be no question of this country coming out of the Common Market on a unilateral basis. There is a real danger that if the reforms mentioned in this debate are not carried out the Common Market is likely to fall apart of its own weight and the shortcomings of the terms under which it now operates. No unilateral move by the United Kingdom would be necessary to bring this invaluable Community to a close.
I should like to mention in more depth some of the dangers that I see facing the country should we continue membership under the present terms. The gravest danger, outlined by the right hon. Member for Down, South, is


that the whole impetus of the Community at the moment is towards a federation. A federalist system is utterly against the wishes of the British people.

Sir Russell Fairgrieve: Rubbish.

Sir Nicholas Bonsor: My hon. Friend says "Rubbish". I have no doubt that the vast majority of the people of this country are determined to maintain an independent and integral sovereignty. They will resent bitterly any attempt by some supranational State created in Europe to override that sovereignty. That is the view, I believe, of a large majority of the Conservative Party as well as of those who voted for other parties at the general election.
Because of the insidious manner in which sovereignty is eroded by the development of Commission rules, regulations and directives, there is a grave danger that the minority opinion that exists in the Commission, in the European Parliament and among some of my hon. Friends will mean that we shall finish up with a federal State, contrary to the desires and wishes of this House. Both my right hon. Friend the Minister of State and my right hon. Friend the Foreign Secretary continually deny any such intention on the part of Her Majesty's Government. I hope that they will guard against the danger that they might be guided along a path which they are not aware they are following and into a federation which this country has no desire to join.
Another danger to which insufficient attention has been given is the weakening of the Community by Southern European States which are now, or shortly will be, members. I hope that my right hon. and hon. Friends on the Government Front Bench will accept that I state this as a friend, and not as an enemy, of the European Community. I do not wish to see the Community destroyed. I do not wish to see the United Kingdom come out of the Community. I wish wholeheartedly to see the Community reformed so that it contributes to the best interests of all member nations and, most importantly, to my own country.
My right hon. Friend the Minister of State talked of the strengthening of democracy by the widening of the membership of the Community. I cannot see how this country has any lessons to learn about democracy from the experience of Spain now struggling to create democracy for the first time for many years. I cannot see how we have any lessons to learn from Portugal, which experienced what was, fortunately, a bloodless but nevertheless violent revolution a few years ago and which is still struggling back to some form of democracy. Nor have we any lessons to learn from Greece, where the legacy of the colonels is still to be seen everywhere. If any lessons are to be learnt from democracy, it is we who can teach the rest of Europe. I hope that those lessons will be learnt and that a Community will be formed in which our version of democracy rules. I trust that such aims will not be overridden by some form of Government of which we do not approve.
There has been talk of the need to safeguard British interests in the Community. I endorse those remarks. It is vital that the budget contribution of this country should be brought somewhere near to parity. What we pay out should come within fighting distance of what we get back. I agree with the Minister that it would be absurd for us to quibble over demands that the sum coming out should be exactly

the same as that going in. We have to be realistic. We have to make some contribution. This need not necessarily be year on year. It is, however, necessary for us to make some contribution from time to time towards the operation of the important institutions of the Community as they develop, despite the fact that I hope that they will not develop in ways that have Peen outlined.
There is a clear need for reform of the common agricultural policy. I do not believe that anyone, apart possibly from my hon. Friend the Member for Flint, West (Sir A. Meyer), is under the impression that the policy as it stands is acceptable. As the other Southern European countries enter the Community so the gap between Northern methods of agriculture and the prosperity of the Northern farmer will come into greater conflict with the poverty and poor performance of the Southern European farmer. It will be increasingly difficult to have a common agricultural policy that is appropriate for the olive growers of Spain and for the milk producers of Cheshire. My right hon. Friend the Minister of State appeared to be under the impression that British farmers are living in the lap of luxury under the common agricultural policy. I can only suggest that he asks my right hon. Friend the Minister of Agriculture, Fisheries and Food what has happened to farm incomes over the last two or three years.
As a farmer—I declare my vested interest—I car say that the income of United Kingdom farmers is 40 per cent. down in real terns compared with three years ago. That state of affairs can hardly be said to underline the success of the common agricultural policy. There has already been reference to the export credits that we have to pay. Exports from the Community under the common agricultural policy cost the Community £8 million a day. A large amount of that subsidy goes directly towards providing cheap food for the Russians. I can imagine no greater folly than to subsidise the food of our natural enemy, which spends 19 per cent. of its gross domestic product on arms with the sole purpose, in my view, of attacking Europe when it feels strong enough and independent enough to do so.

Dr. Mabon: Does not President Reagan defend the sale of cheap American cereals, wheat and grain to the Soviet Union on the ground that this absorbs a large amount of currency which the Soviets would otherwise use to purchase advanced military weapons?

Sir Nicholas Bonsor: I am not interested in the arguments that President Reagan may use to support a policy that is necessary for him to prevent the extreme poverty of American farmers. I believe that it is absolutely wrong for us to 'provide cheap food for Russia, whether from the European Community or from the United States of America. The common agricultural policy needs reforming for those reasons and because it takes such an enormous chunk of the Community budget. There are many areas of need other than agriculture that should be explored in the interests of European countries.
The mammoth percentage of available money that goes into agriculture stultifies the efficiency of many sectors of farming. We have to discover a different and better system to ensure adequate prosperity for farmers and reasonable price levels for food. I believe that my hon. Friend the Member for Faversham is right when he says that we should return to a national domestic structure and that it would be in this country's interests and those of the Community if we were to move along those lines.
I move on to a point that has not been mentioned, and that is the stream of petty legislation that is formulated by civil servants in Europe and overrides what the House and the country feel is right. There has been a stream of unbelievably petty legislation during the past two or three years. We have been told how much noise our lawn mowers should make, what size car wing mirrors should be, the size of packages and the method of packaging and the way in which goods should be labelled in shops.
Those are matters about which our domestic civil servants spend their lives creating regulations. Such regulations are then swept out of the window and other similar ones are swept in at vast expense to taxpayers. I should like to draw the attention of the House to two fatuous examples. I was in the House about a year ago when one of my hon. Friends said to me "You really must stay later this evening, because look what is coming before the House." The heading said something like "European directive 533 part B/3". When one looked more closely, one discovered that it said that it would no longer be lawful for the Government to prevent foreign doctors from Europe practising in this country on the ground that they could not speak a word of English.
I found that unacceptable. I stayed and made an impassioned plea to a House containing at least five other hon. Members. There was a vote on the matter and the Whips, as usual, sent people in appropriate directions, and I think that there were about five or six hon. Members who voted against the introduction of the rule. Even if it had been defeated, I question its legality, because we would have been overridden by the Treaty of Rome and what was decided in Europe. I do not think that the House could have prevented the horde of foreign doctors who do not speak English whom I confidently expect will shortly invade our shores.
A second and more up-to-date example of this folly was handed to me recently. It is headed:
The Endangered Species (Import and Export) Act 1976. Section 6 direction"—
I gather that it comes from a European directive that deals with the care and the maintenance of European tortoises. I do not know how many hon. Members have young children, as I have, but the next time a young child goes into a pet shop, if the pet shop owner is to do his duty properly, the child will be confronted—assuming he is old enough to read—with a form that he will be asked to sign.
The form deals in some detail with how a tortoise should be properly looked after. I am not against children being told how to look after animals, but it should apply equally to other animals. Subsection 2 says:
Constant access to food and water, except when preparing for and during hibernation. Food supply must contain fruit and vegetables (especially green vegetables) and must be supplemented occasionally with canned dog food, vitamins (particularly A, D3 and E and B 12) and calcium.
I am sure that that is right. I hope that every member of the Community who has a tortoise will feed it regularly with dog food, although I venture to doubt it. When I had tortoises in my youth, it never entered my head to give them dog food. It seems absurd and beyond the point of humour that a child who fails to feed his tortoise occasionally with dog food should be liable to a fine of £400 under the provisions of this directive.
The Government's efforts should be directed towards getting the Commission to give its attention to rather more

useful ways of spending its time than producing a plethora of petty, tiresome legislation, which could be equated to a minor wasp sting. However, a minor wasp sting received often enough, or from a large enough horde of wasps, is as deadly as the deadliest snake.
More seriously, I believe that the threat to our sovereignty is something that the House cannot accept. My hon. Friend the Member for Flint, West—I am sorry that he has an engagement that has taken him away from the House—referred to "the myth of sovereignty" that was being threatened by the Community. Our sovereignty is not a myth. It is the most important element of the work of the House. It is the one safeguard for the people of this nation. We heard recently, in connection with the Falkland Islands, a great deal about self-determination. It would be ironic if, at the same time as we fight for the self-determination of the Falkland Islanders, we should give away our own right to self-determination through the back door to a horde of overseas civil servants.
I do not believe any such move is acceptable. I believe that those who died in the Falklands, those who died yesterday, those who fight constantly for the right of our people to live in freedom, would not allow the creation of a European State to take away the justifiable pride and self-determination of a great British people.

Mr. Ron Leighton: I was interested to hear the speech by the hon. Member for Nantwich (Sir N. Bonsor), because I did not hear a word of praise for the Common Market. I heard a long catalogue of criticisms and grievances. I believe that the hon. Gentleman is in tune with British public opinion.
I was extremely pleased to hear the debut—I do not know whether I am allowed to call him my hon. Friend—of the Member for Hackney, South and Shoreditch (Mr. Brown) as the spokesman for the Social Democratic Party on Common Market matters. It was an interesting speech. I thought that we might have heard the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). He had some connection with Common Market affairs, was paid a modest salary and, I believe, received a modest pension. He might have given us a tour d'horizon.
The hon. Member for Hackney, South and Shoreditch restricted his remarks to prosaic matters such as industrial training boards. I make no complaint about that. When the spotlight is turned on the issues, they hide in corners. In these debates we hear only criticisms; we do not hear from the parents of the arrangement.

Mr. Ronald W. Brown: In the debate on 26 May in Volume 24 of the Official Report, c. 955, at 5.52 pm my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) made his speech. I believe that the hon. Gentleman was present.

Mr. Leighton: The occasion was more auspicious. The burden of the right hon. Gentleman's remarks on that occasion was that the budget was lopsided; it was spent almost entirely on agriculture; and, as we were not an agricultural nation, it did not benefit us. Why did he not take action during the three years that he was running the show?

Mr. Spearing: I remember the debate well. The right hon. Gentleman declined to give way to me. Perhaps he thought he was still in Brussels.
I disagree with my hon. Friend about the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Brown). I fancy that the SDP does not agree with the arrangement, but he did not tell us why.

Mr. Leighton: The Social Democrats invented the Common Market, and, whatever monstrosities it commits, they will stick with it, through thick and thin.

Mr. Ronald W. Brown: I pointed out the contretemps between the hon. Members for Bolsover (Mr. Skinner) and for Liverpool, Walton (Mr. Heffer). The hon. Member for Bolsover did not believe that the hon. Member for Walton was making a proper case for the amendment. He even persuaded me not to vote for it.

Mr. Leighton: I did not think that the hon. Gentleman would vote for the amendment, but I shall. By a six to five majority at conference the Labour Party decided to make a central part of its next election manifesto that in friendship and amity Britain should leave the EEC. If the understanding of Front Bench spokesmen is different, no doubt they will say so, but I thought that that was what my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said.
We are discussing developments in the Community between July and December 1981. I agree with the right hon. Member for Down, South (Mr. Powell) that the professed goal of the European Council for full union—economic, monetary and political—by 1980, to which it solemnly agreed about a decade ago, has disappeared. I do not believe that that aspiration retains a shred of credibility. It was a noble but naive hope. It was a unique experiment by a group of dedicated nations which hoped to pool their resources and sink their differences into a brave new Western super-State. That hope is now dead. If it is not, the right hon. Members for Sidcup (Mr. Heath), for Hillhead and the right hon. and learned Member for Hexham (Mr. Rippon) and all the others would he here glorying in the phenomenon.
We are basically discussing the period of the British Presidency. At the beginning there was a resuscitation of hope. Great enthusiasm was expressed, but that has been disappointed. The document before us is extremely dispiriting. It contains no hope. In page 6 it states:
The Foreign Affairs Council in December approved a Commission list of requests for action by Japan aimed at improving the Community's balance of trade with Japan.
It is stating that it is bad that Japan has a trade surplus with the Community and action must be taken.
As the hon. Member for Holland with Boston (Mr. Body) will appreciate, I am enough of a free trader not to worry too much about the Japanese trade surplus. It has no oil. If it is to buy oil, it must have a trade surplus with Western Europe. If the surplus is spent here, we benefit. But the Community is worried and is determined to take action about the surplus. Why is it worried if it believes in entirely free trade? Secondly, should we not be more worried about our larger trade deficit with EEC countries?
The Japanese have one-tenth of our motor car market and the EEC over four-tenths. We have a deficit with the French of more than £500 million per annum and with the West Germans of well over £1 billion. If it is right to restrict Japanese cars coming to Britain, why can we not restrict cars from other EEC countries?
If the Secretary of State for Trade instructed his officials to impose import quotas or tariffs on other EEC

countries, the Attorney-General would point out that he was contravening the Treaty of Accession. If he persisted, any British businessman could arraign the Government before the European Court, and Community law would prevail over our law. That is not satisfactory.
Reluctantly, the Labour Party believes that we are in such a weak competitive position that we need managed trade. I do not mean the beggar-my-neighbour policy that already operates with competitive interest rates and deflation. I should like planned growth of imports; but that would be contrary to the treaty.
The theme that runs through the rest of the document is one of futility. In item after item and chapter after chapter one is reminded of the futility of it all. In page 7, referring to the Foreign Ministers meeting on 14–15 December, it says:
They had a particularly thorough discussion of the budgetary issues, on which there was general agreement that the United Kingdom faced a problem which should be corrected"—
this is the interesting bit—
but not on how to correct it.
They are always having discussions. Discussions do not cease, but the Ministers never come up with anything sensible. During the period covered by the document there have been no sensible solutions to any of the problems.
The last line in page 29 of the document, under the heading "Social Security", says:
Agreement was reached"—
"Wonderful", I thought, "at last agreement has been reached. What did they agree on?" —
on the basis for further discussion by officials.
Is that not wonderful? The officials carry on discussing, but nothing is ever agreed. Page after page, it is all the same.
The annexes are the most interesting parts of the document. They contain one speech by the Prime Minister and two by the then Foreign Secretary. The Prime Minister addressed the European Assembly on 16 December 1981. She referred to the European Council that was held in London on 26–27 November. She said that the main subject of discussion was the mandate of 30 May and that it was worth recalling how it originated. She said:
The problem arose when one of the Member States, my own country, found itself bearing an unacceptable and increasing budgetary burden as a result of the combined effect of Community policies.
So the combined effect of Community policies was leading to unacceptable circumstances for the United Kingdom. The right hon. Lady continued:
The Community agreed, on 30 May 1980, that the problem should be resolved, and I quote—'By means of structural changes'. The Commission was given a Mandate to produce proposals as to how this could be achieved"—
again, here is the interesting bit—
without infringing basic Community principles.
How does one do that without infringing basic Community principles? Continuing, the right hon. Lady said:
The Commission's Report was produced in June and concentrated on three main areas or 'Chapters'. These were the reform of the Common Agricultural Policy, the development of other Community policies, in particular economic, regional and social policies and the Community budget".
They were all to be considered in parallel. The Prime Minister said that the 30 May mandate laid on the British Presidency the responsibility for reaching decisions by the end of the year. She was hopeful that that would be done. The Lord Privy Seal explained at the Dispatch Box that it would all be done. The Prime Minister, in her speech, continued:


I had very much hoped to be able to report to you today that the European Council had been able to reach full agreement on all these matters. Unfortunately I cannot do so. Much progress was made. But on four main areas"—
they were the important areas—
we were unable to reach any measure of agreement.
Complete futility again. A complete waste of time— failure.
The Prime Minister said:
We asked our Foreign Ministers to meet informally"—
perhaps she thought that, as they never came to an agreement when they met formally, they might do so if they met informally; the right hon. Member for Hillhead had explained over the brandy, coffee and cigars that that might be the case—
as soon as possible in a further effort to resolve these matters and to report to Heads of Government. That meeting took place on 14 and 15 December. Despite their best endeavours, Foreign Ministers were not able to reach agreement on the outstanding points.
Once again, there was complete deadlock and failure.
Having given the burden of the Prime Minister's speech, I shall now deal with that of the then Foreign Secretary on 8 July 1981. The Lord Privy Seal will be interested in what I have to say as I am referring to the good old days. It is rather piquant. Matters have worsened considerably since then. In his speech to the European Assembly, the then Foreign Secretary—this is the good news—said:
First, there was the agricultural price-fixing last March when agreement was reached with a pleasant absence of the delay and acrimony which has occasionally characterised this exercise in earlier years.
Everything went right that year. We all know what happened the following year. All hell was let loose. The Minister of Agriculture, Fisheries and Food did not experience that pleasant absence of delay and acrimony. The veto was discussed. We know that the Minister's veto was overruled. I asked the Foreign Secretary
what progress he had made in reinstating unanimous voting in European Community Council of Ministers' procedures".
He replied that he had requested that that should be done on 20 June.
Five members supported the principle that decisions should be deferred where a member State considers that its important national interests are at stake. The position is thus, as it has been since 1966, that there is a division of opinion on this question."—[Official Report, 12 July 1982; Vol. 27, c. 272.]
It emerged that there was no agreement and no veto. I was referred to his speech on 22 June, when he said that his position was
unreservedly supported by two member States and by two others with minor qualifications … In view of what happened at the Agriculture Council on 18 May, I would obviously have preferred a clear-cut result."—[Official Report, 22 June 1982; Vol. 25, c. 155.]
Perhaps he would. But what were we told at the referendum? I have a copy of the official Government manifesto that was issued to all voters at the referendum. It asked in large type:
Will Parliament lose its power?
The document continues:
Fact No. 2: No important new policy can be decided in Brussels or anywhere else without the consent of a British Minister answerable to a British Government and British Parliament.
Later in that part of the document, it said:
It is the Council of Ministers, and not the Market's officials, who take the important decisions. These decisions can be taken only if all the members of the Council agree. The Minister

representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests. Ministers from other Governments have the same right of veto.
That was the basis upon which the British people voted to remain in the Common Market. They were told that their democratic parliamentary self-government was assured. The British veto was the basis of that argument. That has been abrogated. The other document, which was issued by the right hon. Member for Hillhead, said the same thing.

Mr. Spearing: I have the document here. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) and others went further. The document states:
All decisions of any importance must be agreed by every member".
It did not say that such decisions would be on a matter of national importance. No wonder the people were misled by what was said by those who were still Members of the House.

Mr. Leighton: That furthers my point that the basis on which we entered the Community has been abrogated. I should like to hear what the Minister has to say on that.
In page 57 of the Blue Book it is stated:
The basis of the Community's renewal must be the restructuring of the Community budget and the review of the Community's expenditure policies that goes with it.
There has been no restructuring. The budget is dominated by expenditure on one sector. The attempt at rectification for Britain has been botched up. The budget is ad hoc and temporary. No change has been made.
We are told by the Foreign Secretary that there should be changes in the CAP
to discourage the production of surpluses and to limit the costs to which they give rise. It cannot be right that about half of the Community's budget should be spent simply on the storage and disposal of surplus food. This is an expensive and wasteful anomaly that must be corrected"—
then comes the catch—
but not so as to undermine the principles of the CAP.
How does one reform anything without changing it? I should like to hear the Government's view on that matter.
I should like a change. I could explain exactly how to make a change. However, there is no way of making a change because the vested interests are so great. It would be sensible to end common policies on agriculture or for this country at least to opt out and to return responsibilities for agriculture to the member States and let them run their own agriculture as they see fit. At the moment we have a siege economy in agriculture. That cannot be right. The present CAP widens the gap between rich and poor because the subsidies that are paid via the high prices primarily go to the efficient. By definition, those are the rich farmers, who become very rich. No one can say that the prosperity and security of Europe depend on the CAP. It is a complete monstrosity and we should get out of it as soon as possible.

Mr. Marlow: Is the hon. Gentleman aware that the European Assembly is recommending that £20 million should be made available for elections in 1984? Is he aware that that money is to be made available to the political parties—a small proportion will go to the European information office—and that £45,000 will be made available for each constituency, whereas the allowable expenditure in this country is £13,000 for each constituency? For the Conservative Party, some £32,000 for each seat or perhaps a little less will probably find its


way to Central Office funds. Is not that a lot of money? Is it not a matter of concern about which he, as I, would like to know more?

Mr. Leighton: The hon. Gentleman has raised a relevant point. There is the vast expenditure of the Commission on glossy publications that land on my desk. Who pays for those? I suppose that the Community taxpayers do. Then there is the European Assembly, which is one of the most futile talking shops ever invented. It has the most minimal effect on Community affairs. If what I read in the newspapers is true, many European Members of Parliament travel to the Assembly solely to draw their exorbitant expenses without taking part in the debates—wisely, because the debates are useless and futile—and straight away go home. All that is at vast expense to the taxpayer, for no useful purpose.

Mrs. Elaine Kellett-Bowman: Will the hon. Gentleman give way?

Mr. Leighton: I would rather not give way. The hon. Lady can make a speech in Strasbourg.

Mrs. Kellett-Bowman: rose—

Mr. Leighton: I am always willing to give way to a lady.

Mrs. Kellett-Bowman: In view of what the hon. Gentleman has said, he will be glad to know that reform is under way so that only those who do the work will be properly paid.

Mr. Leighton: I am pleased to hear about that reform. Those who do the work will be properly paid, whereas before people were paid exorbitantly at taxpayers' expense for doing nothing. We are told that matters will improve. I am sure that the hon. Lady will benefit because I have no doubt that she is a hard worker.
The Foreign Ministers met on 14 and 15 December. On 17 December the Foreign Secretary said:
We were able to have a useful discussion. I would naturally have liked to be able to reach agreement on this matter during our Presidency".
He was talking about the common fisheries policy. He said that agreement still had to be reached. He can say that again. If I understand it aright, two-thirds of the fish in the Community pool come from United Kingdom waters. If we were outside the Common Market we would have our own 200-mile exclusive zone. The fish would belong to us. Inside the Community, however, we shall see a sell-out of the British fishing industry and we shall be robbed of our reserves.
In paragraph 10 of his speech on 17 December the Foreign Secretary said:
the Community has made disappointingly little progress towards full liberalisation in such fields as insurance and air transport.
In other words, in areas where Britain could benefit, such as insurance and banking, the blocks have been put up. The Common Market has not been completed, so Britain loses out.
In page 67, paragraph 15, the Foreign Secretary said:
Divergence among Community states has increased rather than diminished.
That means that the rich areas have been getting richer and the poor areas have been getting poorer. That does not surprise me. The benefits of free trade do not fall equally. That is a fact of economics. If they did, there would be no need for regional policy. We have a regional policy to

readjust the effects of free trade. The United Kingdom has a regional policy for Scotland, Wales and the North to try to counterbalance the effects of free trade.

Mr. Body: Does the hon. Gentleman agree that the largest subscribers to the European Movement and to the "Yes" campaign, in industry, have invested vast sums in Belgium, Germany, France and other parts of Continental Europe, providing tens of thousands of jobs for people in those countries, instead of investing in this country and providing jobs for British people?

Mr. Leighton: The hon. Gentleman is right. That problem has been exacerbated by the lifting of exchange controls. Last year about £4 billion of British portfolio investment flowed outside this country to re-equip our competitors, the better to compete against us.
I have heard it said that we should stay inside the Common Market so that we should be the recipients of Japanese inward investment, but we would then become a conveyor belt for Japanese goods into the Community. We would not need foreign investment if we could keep a percentage of our own investment in this country.
The experience, common sense and, indeed, self-respect of our people lead us all to the same conclusion—that it would be far better for us to leave this arrangement. It was not designed for us and it was not reformed for us. We should not have been so arrogant as to have expected anyone to reform it for us. Why should they? On the basis of friendship and amity, we should leave. The Labour Party conference had a five-sixths majority in favour of such a policy. I am certain that that will form the central point of our election manifesto at the next general election. I shall support it wholeheartedly.

Mrs. Elaine Kellett-Bowman: I have always believed that far and away the most important reason for establishing the European Community was to safeguard the peace of Europe and, as far as possible, that of the rest of the world. It is a pity, therefore, that the period that is supposed to be under review by the House tonight does not strictly include the Falkland Islands crisis, when the Council, the Commission and the European Parliament backed us immediately and wholeheartedly.
The Community's next most important task is to increase the well-being of its citizens. In this task nothing is more important than the combined work of the Community's three instruments—the European Investment Bank, the regional development fund and the social fund referred to in paragraphs 7.3, 7.4 and 9.1.
In his opening speech my right hon. Friend referred to the illogical lack of balance between agricultural and other Community spending. He stressed that we need a better balance of policies and must build a more sensible industrial and social programme for the European Community in order to lessen the gap between its regions. No one can deny that progress is slow, but progress there is, and we would not be human if we did not want more rapid progress.
The hon. Member for Newham, North-East (Mr. Leighton) quoted from the Prime Minister's speech in Strasbourg. My right hon. Friend was the first Prime Minister of a European country to speak at the European Parliament in Strasbourg. The hon. Gentleman quoted the Prime Minister as saying that we had been given the


responsibility of reaching decisions by the end of the year. He did not add that her next words were that that target was always ambitious. Ambitious it was, but nevertheless a great deal of progress was made under the dynamic leadership of the British Presidency.
I have served on the regional and social policy committees of the European Parliament for seven years. For years we have demanded better co-ordination between the various Community instruments, which we felt at one time were completely unco-ordinated and at times overlapped or, even worse, worked in opposite directions. Gradually the three main instruments have been brought into harmony so that a concerted attack can be made on the problems of the Community. This is very well covered in the document now before us.
However, the complete lack of comparable statistics made it very hard to work out a common policy. Statistics simply did not exist. We could not compare the policy of one Community State with another in any direction. We had no map to chart the journey that we wished to follow. That gap is now being filled, and in the period under review the Commission has published the first periodic report on the state of affairs in all the regions of the Community, giving information on all manner of subjects—unemployment levels, gross domestic product per head, demographic tables, and so on, for all the regions.
That is an invaluable basis on which we can build proper European policies to defeat the scourge of unemployment that afflicts all European countries and the whole of the free world. Over the years the proportion of the budget spent on regional and social policies has steadily increased. The United Kingdom has done very well from those policies. In 1981 nearly £200 million came to the United Kingdom from the quota section of the regional fund to a very wide variety of projects. If the regional fund regulation is amended in the way that the Commission suggests, we will do even better in the future.
Providing an industrial infrastructure in bricks and mortar is only one half of the story. Working practices are changing rapidly, and the social fund plays a major role in assisting the efforts, particularly of our MSC, in training or retraining people to fit the jobs of the future. This country has always been behind in training and we are rapidly trying to catch up. We are relying heavily on social fund assistance for the training programme that the House was discussing a month ago.

Mr. Heifer: The hon. Lady says that we were behind in training and I accept that we were not as good as we should have been, but we had some training boards until the Conservative Government destroyed them.

Mrs. Kellett-Bowman: I was not referring to that type of training. I was referring to the fact that 90 per cent. of the youngsters leaving school at 16 in Germany go on for further training or apprenticeships compared with roughly 45 per cent. in this country. Therefore, the Government are doing what a Labour Government failed to do to fill in that training gap. The Government have brought forward a programme costing £1 billion to fill the training gap and help our youngsters to catch up. For that we shall rely heavily on money from Europe.
Spending from the social fund will be substantially increased this year. Last year the training programme was

considerably over-subscribed. Therefore, more money will be put in so that that gap can be plugged and young people helped to fill the jobs of the future that will become available as the economic upturn begins.
One of the most useful instruments for helping industry in the assisted areas is the European Investment Bank. My own constituencies of Lancaster and Cumbria benefit substantially from European Investment Bank loans. The rates of interest are lower than those prevailing in the United Kingdom. They are fixed for the term of the loan, and that makes it much easier to plan ahead. The repayments do not begin until two years after the commencement of the loan, by which time the investment is usually earning its keep.
The European Investment Bank is a flexible instrument. It has played a useful role in helping us to modernise our infrastructure. We in the North-West—this is one point on which the hon. Gentleman will agree—have the worst sewers in the United Kingdom. There is a major sewer collapse in the North-West every day of the year—and an extra one in leap year. The North-West water authority has received massive loans from the European Investment Bank, as has the North-West electricity board. Many of our large industries, such as paper making and shoe manufacturing, have also received loans.
The European Investment Bank is not for the big boys only. Small firms and investment projects as small as £30,000 can receive loans. An increasing number are doing so, and thereby improving their capacity to compete in an increasingly competitive world.
One of the unquantifiable benefits referred to by my hon. Friend the Member for Flint, West (Sir A. Meyer) is the free entry to a market of 265 million people. There is no country more dependent on world trade than the United Kingdom. If we adopted the siege economy mentality and policy of the official Opposition, we would have to leap over a common tariff wall to get our goods into Europe. It is hard enough as it is to compete in markets, but if we had in addition to pay tariffs, our trade and the jobs dependent on that trade would be decimated.
I end as I began. Europe is a bulwark of democracy in a troubled world. My hon. Friend the Member for Nantwich (Sir N. Bonsor)—who, alas, is no longer in the Chamber—said that we had no lessons in democracy to learn from Spain or Portugal. Nobody has suggested that we have, but I believe very strongly that the Spanish and Portuguese might never have thrown off the yoke of tyranny if they had not had the hope of joining the European Community. I believe that the fragile democracies that now exist there will be strengthened and preserved by their joining the Community. Europe is not just about butter or lawn mowers, as my hon. Friend seems to think. It is about living together in peace in an increasingly dangerous world. I believe that that weighs a thousandfold in the balance against the niggling, querulous criticisms of the official Opposition.

8 pm

Mr. Lawrence Cunliffe: I apologise to the House for leaving during the earlier part of the debate, but I had to attend a sitting of the Services Committee, dealing with security—a subject of great importance, particularly at present. Therefore, I hope that the House will understand if I repeat points that were made in the earlier part of the debate.
We are dealing with a complex subject, and the period that we are discussing ended in December 1981. The right hon. Member for Down, South (Mr. Powell) was extremely agitated over the Middle East initiative taken by the Ten as a result of the Venice declaration. I did not fully share his views and anxieties about the declaration, although I accept that some of his arguments have been proved, with the events now taking place in the Middle East, to be partially correct.
My interpretation of the Venice declaration concerning a European peace initiative was that it was a paper tiger. Its intentions—to be generous to those who drew up the declaration—may have been sincere, but it has proved to be a political damp squib. It was ill-conceived. It was expedient for the leaders of the Ten to have some sort of formula to bring back to their Parliaments and Governments, commenting generally on the position in the Middle East, but events have proved the document to be rather meaningless. Indeed, I should like the Minister, in replying to the debate, to tell us to what extent the objects of the declaration have been achieved. We have had a talking shop, and the events in the Middle East have been glossed over in many respects, because the former Foreign Secretary happened to be the President of the EEC Council at the time in question.
None of the parties involved—Israel, Egypt and the United States—received the declaration with acclamation. It was coolly received not only by the countries which were signatories to the Camp David accords, but by the Arab world generally. The Minister of State nods his approval at that comment. It is no use the Government denying that opposition to the aims and objectives of the declaration has been clearly spelt out.
The right hon. Member for Down, South said that European involvement was not necessary and that, generally speaking, the reaction had been unfavourable. He felt that the Government had given a total commitment. He asked whether there was a guarantee that the Ten would automatically respond to an invitation by President Mubarak on any of the issues affecting his policy in the Middle East.
The spokesman of the PLO was clear about its attitude to the European initiative. The PLO says that it has the right to speak for itself. Its spokesman said:
We can never allow any party to interfere in our affairs, especially in two major matters: our non-recognition of Israel and our refusal to amend our national character in any way. I hope I am making myself clear to everyone everywhere, especially to the European countries. We have said over and over again that we refuse to recognise Israel. This is an unchangeable, permanent policy".
That statement was made by Farouk Qaddame, head of the political department of the PLO, in an interview with the Beirut weekly, Monday Morning, in April 1981.
The right hon. Member for Down, South referred to President Sadat. I happened to be in Egypt when President Sadat was assassinated. People throughout the world mourned the passing of such a fine and worthy statesman who had brought some stability to the Middle East, but the PLO security chief, Abu Iyad, said:
We are happy over the assassination of the master traitor. Europeans like Kreisky, Mitterrand and Giscard d'Estaing are free to be sad as they want, but we are happy and we make no secret of it.
I have a further quotation from the PLO on the death of Sadat:

This is the best news we have had in many years! It is the Egyptian people that has got rid of Sadat. The Egyptian people has also rid itself of the shame and the dishonour that Sadat had imposed on the grand history of Egypt".
How can one talk rationally, in the interest of peace in the Middle East or world peace, to people of that kind? It is highly regrettable that inflammatory comments of that sort are made. Such comments as I have quoted can never be relevant to achieving a permanent peace in the Middle East.
We all deplore the tragic events now taking place in the Lebanon. We detest the horrors of all wars, whether large or small. They are immeasurable in terms of human misery. We have recently experienced in the Falklands a war of a minor character, but with very serious consequences for those who lost their lives or were maimed. But we have been reminded, in regard to the conflict between Israel and the PLO in the Lebanon, that we also relied on article 51 of the Unitied Nations Charter in defence of out action in the Falklands.

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am sorry to interrupt the hon. Gentleman. I am listening carefully to his speech, but I am having difficulty in identifying his current remarks with the amendment that we are debating.

Mr. Cunliffe: My remarks are related to the section of the document on Middle East affairs, paragraphs 3.6, 3.7, 3.8 and 3.9.

Mrs. Kellett-Bowman: The Falklands are not in the Middle East.

Mr. Heller: The document covers not only budgetary matters of the Common Market, but discusses the Ten's views on the Middle East, South-East Asia, Poland and so on. The hon. Member for Lancaster (Mrs. Kellett-Bowman) may remember that I said in my speech that I should have liked to speak on those issues but lack of time prevented my doing so. My hon. Friend may have strayed a little from the subject, but, within reason, he is In line with what is set out in the document.

Mr. Cunliffe: With respect to the House and to you, Mr. Deputy Speaker, I was trying to make out a case for the uselessness of the Venice declaration. That is the basis of my peroration today. It is relevant to discuss current events in the light of what has happened and to put into perspective what flows from reports of this type.
It is appropriate to quote Disraeli, a Jewish statesman, who said:
It is much easier to be critical than to be correct.
I accept his point. The Israelis have been subject to strong criticism and attack. There has been a degree of over-kill which Europeans, Asians or others have failed to prevent. It is regrettable, although inevitable, that the reservoir of friendship towards Israel has been somewhat diminished and damaged by recent events. I accept the point that the Prime Minister has made in statements over a period of time. In this case, I claim that two wrongs do not make a right unless they are atoned for.
In defence of Israel's position, we must understand that it is a young nation that has faced continual hostilities and has at the same time an immigration problem. No rnatter what one says, Israel established a fine and reasonable democracy—the only democracy in that part of the world to sustain itself. We must try to understand the thinking and mentality that force the Israelis into their current


position. We must acknowledge that Israel is making positive efforts to bring about the evacuation of PLO terrorists from Beirut. They have granted access—

Mr. Deputy Speaker: Order. I cannot see that the hon. Gentleman's remarks have anything to do with the amendment that we are debating. He must confine himself to the subject of the debate.

Mr. Cunliffe: In conclusion, Mr. Deputy Speaker, I should like to refer to a point made by the hon. Member for Lancaster (Mrs. Kellett-Bowman) about European grants. She said that the North West region had inherited paper manufacturing and other industries that had received substantial grants from the European Community. If she had been present in the House last week during the regional debates when every area was represented she could have examined the mammoth unemployment figures and compared those with the figures for the North West region, where there are 456,000 unemployed—the highest number of unemployed for any region—

Mrs. Kellett-Bowman: rose—

Mr. Cunliffe: —the hon. Lady could have examined the built-in regional disparities that have existed in this country during the periods of different Governments and viewed them in the perspective and framework of the European grants that are available. She would have seen that, by a national Government decision—that of her own Government—80 per cent. of the North West region was degraded in aid status from 1 August.

Mrs. Kellett-Bowman: I thank the hon. Gentleman for giving way. He has raised an interesting point, because my constituency was one of the worst in the North West when the hon. Member for Liverpool, Walton (Mr. Heffer) came to see us years ago, and he gave us no help at all. However, with the help of European and other aid, we have now brought ourselves up. Now we are not merely better than the regional average, but better than the national average. Much of that is due to the help that we have received from Europe. So one part of the North West has made positive use of Europe and has benefited from it.

Mr. Cunliffe: I remember when the right hon. Member for Leeds, North-East (Sir K. Joseph) was Secretary of State. Degrading proposals were introduced—

Mrs. Kellett-Bowman: Downgrading.

Mr. Cunliffe: Downgrading, degrading—call it what one will. It is the same thing. When an area goes down in the financial league in terms of grants, it is degrading. It is degrading the areas. Towns like Blackpool and Lancaster were upgraded. They were given an uprated financial status at that time, to the detriment of many of the older industrial towns and constituencies. Eighty per cent. of the North West region has been removed from assisted area status. This is perhaps a matter that the House could debate on another occasion. It was a question of robbing Peter to pay Paul. There was political chicanery to help marginal Conservative seats. There is no argument about that.

Mr. Bill Walker: rose—

Mr. Deputy Speaker: Has the hon. Member for Leigh (Mr. Cunliffe) finished?

Mr. Cunliffe: Yes.

Mr. Deputy Speaker: I call Mr. Tom Normanton.

Mr. Tom Normanton: I am grateful, Mr. Deputy Speaker, that you have allowed me to catch your eye at this stage of the debate, and to follow the hon. Member for Leigh (Mr. Cunliffe). He may think that my speech is a strange successor to his contribution, but I happen to be chairman of the all-party political group, Friendship with Israel. In that sense, I go a long way with the argument that he made as a major part—however minor it should have been—of his speech.
His reference to the late President Sadat is relevant to our membership of the Community and to the report of the Presidency, in that it was the first time that a statesman of such great and international importance sought permission to address the elected parliamentarians of Europe. That was his interpretation of the significance of the Community for his country—and, therefore, for Israel. His assassination was one of the greatest tragedies for Egypt-Israel relations.
However, that subject is not the main purpose of our debate this evening, as you will be quick to remind me, Mr. Deputy Speaker. I want to refer to the hon. Member for Liverpool, Walton (Mr. Heffer), whom I am glad to see in his place. I apologise to him for having missed part of his opening speech. However, the part that I did hear convinced me completely that his views were thoroughly predictable and consistent with what he has said for a long time. That consistency is devoid of any serious comprehension of how the European Economic Community works and of our membership of it. Would that that lack of comprehension were restricted to the hon. Gentleman and other Labour Members, but unfortunately it is not.
Anyone listening to the debate would be justified in believing that it was a re-run of the great debate of "should we, shouldn't we; are we in or are we out?" To politicians both inside and outside the House, the "in-out" debate is as sterile and unproductive as any could be. I deplore the consistency with which that campaign is pursued because it is inimical to Britain's maximising the opportunities presented by membership.
I shall not mention all the points in the report but touch on issues which have a bearing on it and which the Government might find a little embarrassing. First, the British Presidency that we are discussing was our first constructive Presidency since we joined. By "constructive", I mean that there was never any doubt in the minds of the political leaders, the Heads of Government and all concerned in the Community institutions that Britain was anxious to contribute energetically and dynamically to the collective benefit of Europe and especially Britain. That approach by Britain could and should have been spelled out in the report, although it may have caused a little shyness.
Secondly, because of the calendar, the Presidency lasted a short six months. In effect, it was four and a half and not six months of intensive effort. That more limited period was restrictive for a Presidency that had made comprehensive and intensive preparations well before assuming it. In my nine and a half years experience in the European Parliament and experience of the Political


Affairs Committee where such matters are constantly discussed, that was a unique occurrence. The Government can take satisfaction from that achievement.
Moreover, the impact that Britain made upon the political leaders of the other nine member States was profound and, though insufficient, will prove to be long-lasting. That impact should be compared with the impression made upon the political leaders of what were then only eight other member States, when the Presidency was in the hands of the Labour Government four and a half years ago. The impact of that Administration is that an albatross had been round Britain's neck for many years. At long last it has been removed by the clear and unequivocal declaration of my right hon. Friend the Prime Minister and the Government that we are in Europe and that we are determined to be energetic and dynamic in our contributions.
In case my right hon. Friend the Minister of State and other hon. Members believe that I am being sycophantic about the Government's performance during our Presidency, I have no hesitation in saying that they have a long way to go before Britain as a whole—the Government have a part to play—is fully au fait with the European Community system. But I am confident that the matter will be put into perspective when we remember that Britain has been a member for only nine and a half years, whereas the founding members set up the Community 25 years ago. It is obviously a political adventure for British Ministers, industry and institutions to enter Europe. It is new ground, but until we devote ourselves entirely to the Community we shall not benefit from the opportunities that are open to us.
I am highly critical of some ways in which we approach the Community's policies. We all applaud the way in which British industry and its representatives—the CBI is only one mouthpiece of British industry and I am a member of the European committee of the confederation—is benefiting increasingly from our membership, but until industry understands how to influence decision-taking processes at Community level our industriial performance will fall short of what should be achieved. To illustrate that point, the European development fund represents about 5,500 million units of account, but the portion of that fund given to British industry is minuscule compared with what other member States have managed to grasp. That is because industry has not come forward with requests to tender for major contracts.
A different perspective of Community membership was offered during a meeting with a German Minister. During our discussion, I asked, "I wonder for how much longer Germany will be the paymaster or the milch cow of Europe." I shall not repeat in English his exact words—he responded with ardour—but the tenor of his reply was "Do not talk arrant nonsense. For' every deutschmark that Germany puts into the Community, German industry benefits by three deutschmarks." As he put it, "Where can you get a better deal than that?"
We shall get that kind of deal and we must benefit from that kind of involvement in our membership of the Community. It is up to industry, with the encouragement and stimulus of Government, to show that we can operate even more profitably and successfully than we are.
In the normal way, I should never dream of talking about regional policy for the good reason that my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman)

is a member of the European Parliament, is in a Committee and is recognised as being one of the most knowledgeable Members involved in this subject. We have to move away from the concept of substituting Community funds for national funds. Additionality must be the line that we should follow. Britain is not alone in this—every member State is falling short. We have to move more in the direction of the original intention that the regional funds would be additional to those from national Governments.
I could not help being reminded, in the course of contributions from hon. Members on both sides of the House, of the trade union leaders pulling their voting cards out of their pockets and saying, "Here is my power." If that is, or were to be, the significance of the Luxembourg compromise, we should be doomed to disaster. It is not by the use of a veto that we shall achieve what Britain and the Community want. It will be by force of argument and by the determination of all who take part in Community activities—Government, Civil Service and industry alike.
I cross swords with the Government on the subject of the size of the budget. It wall have to expand for a variety of reasons, each of which in itself would be the subject of a long debate in the House. Joining the EMS is a matter not just of timing but of political significance and again I do not subscribe to the views expressed on this point.
My last point concerns civil servants. Some right hon. and hon. Members may ask what the debate has to do with civil servants. However, I wish that we would treat our civil servants, in the context of our membership of the Community, in the way that the French treat their civil servants. I commend to Ministers a close look at the full significance of this. No French civil servant who aspires to high office and influence will go anywhere unless he plays an energetic and dynamic role in the institutions of the Community. We should take a leaf out of that book.
I strongly believe in the concept enuniciated by a former, well-respected right hon. Member of the House. I refer to a speech made by the late Sir Winston Churchill, in which he said that if Europe were to survive we had to move in the direction of a United States of Europe, or some such thing. I am not in the least concerned whether this is federal or confederal but I am determined—in my modest way I shall continue to play my role in this direction—to ensure that we move in the direction of unity of Europe. Without unity across the whole political spectrum, there is no future for Britain or Europe.

Mr. David Stoddart: The hon. Member for Cheadle (Mr. Normnanton) said that the debate was a re-run of the "in-out" argument. I have news for him. There will be many more re-runs of that argument, not only in the House but in the country. That is because many hon. Members and people in the country know perfectly well that we should never have gone into Europe and that we should not stay in Europe because our membership is inimical to Britain's best interests. Many people who voted to remain in Europe in the referendum have now come to the conclusion that they made the wrong decision. If they were given the opportunity, they would make a different decision now.
Before we entered the EEC Britain was misled on every count by people who should have known better and who should have told the truth. We were told that going into Europe would enable is to take a great economic leap forward. We were told that we would sustain the cold wind


of competition that would make our industries blossom and make us more competitive in the huge market of 265 million people. The reverse has happened. Far from thriving in Europe, our membership of the Community has caused economic devastation, higher prices and many other ills that we could have avoided.
There are few hon. Members in the House tonight to discuss this matter. There has grown up about the EEC a cynicism, a dislike and a feeling that the whole matter is irrelevant. However, people are mistaken. It is necessary to discuss the affairs of the EEC in detail on every possible occasion to see how Britains' influence and interests are being undermined by our memebrship of the Community.
My hon. Friend the Member for Newham, North-East (Mr. Leighton) said that hopes of a federal European State were dead. I assure my hon. Friend that they are not. Many hon. Members, particularly in the Social Democratic Party, would be delighted to see Britain merged into a federal European State.
We must always be on our guard against that proposition. There is no doubt that some hon. Members have little regard for our present constitution or for the history of our people and little regard for, or at least understanding of, the future benefit of Britain. Therefore, they would be quite happy to see us merge into a federal European State, which is supposed to be the be-all and end-all. We must be ever-watchful that such people do not gain an influence in the House and the country that would enable them to undermine the British consitution that has lasted, developed and thrived over a thousand years.
The document before the House is entitled "Developments in the European Community July-December 1981". It is worthless. There have been no developments during that period. There have been no developments in the CAP. We have been saying ever since we became members of the Community that the common agricultural policy upon which the whole Community is based must be reformed. Every six months a document comes before the House which says exactly the same. No reform has taken place. I assure the House that no reform will ever take place.
The whole Community is based on the common agricultural policy. If the policy is undermined in any way, the Community will fall apart. Yet if the common agricultural policy is not reformed, this country will continue to get the neck of the chicken and the wrong end of the stick and will continue to be a big payer into Community finances. There have been no developments in the last six months or in any previous period of six months on the major and vital issue of the Common Market.
We were assured before we entered the Community that, once we were a member, we would be able to reform the common agricultural policy. Is that not what we were told in 1975 during the referendum? It was argued that if only we could get into the Common Market we would be able to reform its institutions and change the Treaty of Rome. We have done nothing of the sort. We shall never be able to do anything of the sort. The sooner hon. Members realise that, the better it will be.
There has been no real reform of our contribution to the budget, nor do I believe that there will be any. It is not in the interests of other powerful countries in the Community to bring that about.
Events have also gathered about us that show this country where its interests lie and those who are its friends. We saw during the Falklands crisis exactly those who would stand by us in a period of great trial. The first to come to our aid and comfort were the people we sold out in 1973—New Zealand and Australia. We almost crippled New Zealand's economy then. If some people had their way, its economy would be crippled even further.
We saw how the EEC, at a crucial point in the negotiations at the United Nations, stabbed us in the back by refusing to continue sanctions for a reasonable period. We saw two members of the Community, one just across the water, withdraw sanctions completely and give comfort to an enemy that had invaded British territory and taken British people under its Fascist wing. We saw exactly who our friends were. They were not in Europe.
Many of the countries of Europe stabbed us in the back one day and then, on the issue of the veto, held us to ransom the next. They were thinking of their own pockets and their own interests. They were prepared to take advantage of our trial and tribulation to line their pockets at the expense of the British consumer through higher prices in the shops.
There were no real developments in the European Community in the six months to which the document relates. There were signs to show us who were our friends. I warn the House that even now suggestions and plans are being made further to injure those friends who supported us over the Falkland Islands dispute. There are plans to reduce the amount of New Zealand butter that can come into the country. If Eire, one of the countries which was least helpful to us, has its way, the amount of New Zealand butter entering the country will be reduced from 92,000 tonnes to 60,000 tonnes a year. That would be a devastating blow to New Zealand—to our people, who have been prepared to stand by us through thick and thin on many occasions. I hope that hon. Members will take note of what happened during those perilous times and of the people who stood by us and gave us not only moral support but material aid. I believe that hon. Members will eventually understand what they have to do.
I want to refer to the amendment moved by the hon. Member for Faversham (Mr. Moate).

Mr. J. Enoch Powell: It has not been moved.

Mr. Stoddart: It is on the Order Paper. I am sorry that it has not been called. It would have been interesting if it had been.
I understand the position of some Government Members. I believe that the feelings of members of the Conservative Party throughout the country are changing, and that the past six months have shown grass-roots Conservatives where they should go and where their loyalties should lie. Those Conservative Members who believed that they understood the EEC from the beginning have recently begun to understand it even more. They can take comfort from the new feeling in the Conservative Party. The amendment to the Opposition's amendment shows progress; it shows that Conservative Members are now prepared to stand up and be counted. I believe that the sooner more of them do that the sooner the country will realise its true potential, understand its heritage and withdraw from the absurd European Community.

Mr. Bill Walker: The hon. Member for Swindon (Mr. Stoddart) made interesting and direct comments, some of which I agree with. His remark that New Zealand has always stood by us in time of need is particularly relevant in the light of the recent events in the South Atlantic.
The hon. Member for Liverpool, Walton (Mr. Heffer) also made a good speech. He would not expect me to agree with all his conclusions, but I hope that he will not be too offended if I tell him that he speaks much better from the Front Bench than from the Back Benches. I hope that that does him no harm.
My hon. friend the Member for Lancaster (Mrs. Kellett-Bowman) mentioned the aids that were available from Europe. When the taxpayer is told that we contribute Y to the European coffers and get back Z, and that he has to pay the difference, and, on top of that, that we are getting money from Europe, I wonder what he thinks. All the money coming from Europe is merely British taxpayers' money recycled. We should be honest. It is a disservice to any organisation to pretend that it is different from what it is.
I do not believe that the hon. Member for Newham, North-East (Mr. Leighton) really believes that Members of the European Parliament go there merely to draw expenses. The next thing that he will tell us is that Scottish Members come here merely to draw expenses. The expenses that I can draw would be the last thing that would encourage me to come here. We come here, and I imagine that the MEPs go to Europe, to influence what happens. But some of the things that come from the European Parliament make me wonder what they are doing. Seen from the United Kingdom's position, some of those things are frightening.
I fully support the comments of my hon. Friends the Members for Faversham (Mr. Moate) and for Nantwich (Sir N. Bonsor). Because of the time, I shall not go over in detail what they covered.
We must start to look at fundamentals. In the six months under review much has happened in Europe and in the United Kingdom. Low productivity, endemic high inflation, high unit labour costs and the low profitability that has bedevilled us for many years are not a result of our membership of the EEC. The failings of management and the intransigence of the unions will not be altered by the fact of our being inside or outside the EEC.
We must consider whether our membership of the Community as it is presently run is helping or hindering our prospects of improving our economic performance. Sadly, it does little to help us in these difficult times. If we cannot help ourselves to sort out our problems our standard of living will continue to deteriorate. That is why, with my hon. Friend the Member for Faversham, I put my name to the amendment which has not been selected.
Statements about trade, and in particular trade in manufactured goods, generally concentrate on the number of jobs that depend on exports to other EEC countries. I have looked at the figures. We sell in surplus to the rest of the world and in deficit in manufactured goods to Europe, so we must consider the jobs involved in exports to countries outside Europe. I repeat that our efficiency in trading depends not on the potential of a market of 255 million individuals, but on our capability to penetrate and

to perform consistently in the market inside or outside Europe. What is important is that we recognise that we must sort out our problems.
For a long time I have been disturbed about the discrimination within Europe against insurance companies. The British insurance companies are the finest in the world, and I am pleased to say that the largest employer in my constituency is an insurance company. That corporation regularly performs well world-wide, but it could perform better in Europe if it were not discriminated against. That is contrary to all that we were told when we agreed to enter the EEC.
I should like to comment on the trade embargo with the Argentine during the difficulties in the South Atlantic. I welcome the support that we received from the majority of European countries, but I regard the behaviour of the Irish Government as despicable. Once again, they stabbed us in the back. I have said that they stabbed us in the back, but let us consider what is happening. One of the whisky companies in my constituency has built up trade with the Argentine during the last 17 years to the point where turnover is now £3 million or 30 per cent. of whisky sales to the Argentine. That should be remembered by the Government, particularly when the Scottish people speak out against the action of the Irish Government and how member States behaved or did not behave.
Scotch whisky is in world-wide competition with Irish whiskey, and that fact should not be forgotten—[Interruption.] The right hon. Member for Western Isles (Mr. Stewart) should not shake his head. Scotch may not be in competition in the Palace of Westminster, but it certainly is world-wide. The Scotch whisky industry has a remarkable export record. One does not need to be terribly clever to know that if sales to the Argentine are adversely affected on a permanent basis Irish whiskey will be sold instead and, therefore, the Irish will benefit at our expense. That will influence the way in which the electors of Perth and East Perthshire will judge the behaviour of Community members. In particular, they will look carefully at the way in which the Irish have behaved.

Mr. Donald Stewart: I agree with the tenor of the hon. Gentleman's argument, but why does he think that the Irish Republic should be faithful supporters of the British Government?

Mr. Walker: I was viewing the Irish as members of the EEC. We have been told that Europe works collectively on matters that affect a member or the Community as a whole. The behaviour of the West Germans, French and others during the South Atlantic conflict was impeccable, but the Irish Government deliberately stabbed us in the back. That must he placed on record and remembered.
When the EEC seventh directive on VAT on used vehicles comes into operation, I believe that it will cause considerable problems to United Kingdom distributors of used vehicles, such as garages. I shall not bore the House with details, because I do not have time, but if the directive is implemented as intended people selling second hand cars will find that they are paying more VAT than the profit that they can possibly make.
However one looks at that, it makes no sense. Anyone who handles VAT knows that that cannot happen with the input-output arrangement. But this can and will happen, and something must be done about it. The lesson from


West Germany is that the distributors of new cars do not sell second hand cars. Those of us who trade our cars in for new ones will find that we shall have to go to Charlie or somebody else down the road. The whole thing will turn into an enormous problem, so we must deal with it quickly.
I am not anti-Europe. That is on record. At the beginning I worked to keep us out of Europe, but since going into Europe I have worked strenuously with the party to make Europe work. I still want it to work, but unless there are fundamental changes I believe that the Labour Party's posture of withdrawal from Europe will have more and more appeal for the British electorate. We must recognise that that will not benefit the Conservative Party, Europe or Great Britain. Therefore, we must ensure that those fundamental changes take place and that we benefit from them.

9 pm

Mr. Eric Deakins: I shall be brief because of the time. I entirely agree with the last remark of the hon. Member for Perth and East Perthshire (Mr. Walker).
I wish to make three points. The first was appropriately raised by my hon. Friends the Members for Swindon (Mr. Stoddart) and for Liverpool, Walton (Mr. Heffer), who opened for the Opposition. Our country's record of Community achievement is one of unrelieved failure. That point does not need labouring at this stage of the debate. We have failed to achieve any fundamental reform. The soothing and anodyne words in the various sections of the document have been repeated ad nauseam over the past six to seven years under Governments of both parties and we have got nowhere.
I am looking forward, as other hon. Members must be, to the next report which will cover the period of our dismal failure over the Luxembourg compromise on majority voting. It will be interesting to see what anodyne expressions will be used to paper over not a crack but a fissure in the structure and fabric of the Community.
My second brief point is about trade, as the Minister for Trade is present. Will he say why Ministers keep boasting about the increasing proportion of our trade, particularly exports, which goes to the European Community? What difference does it make whether we sell a motor car in Germany, Japan or Brazil? What matters is the total volume of our trade, not whether the proportion going to one part of the world is growing or contracting. There can be nothing inherently good in a greater proportion of a given volume of exports going to one particular part of the world.
My third point is about political co-operation. I see great dangers here, although this seems to be our only success story in the Common Market. The first danger, concerns a common foreign policy. I shall not belabour it as it arose in Question Time a short while ago, when the Minister gave a Delphic answer to a question that I and others had raised about the difference between a common foreign policy and political co-operation. He said that the one depended on the other, but he did not make it clear whether the Government favoured or opposed the emergence of a common foreign policy.
The second danger has already been seen. The Commission and the federalists in Europe, having noted

the success of political co-operation, will increasingly wish to bring it within the treaty framework of the Community because it is the one success story. That is why we were recently confronted with that absurd document—a draft European Act. It was indefensible and full of Community jargon. I hope that we have seen the last of it, although I suspect that we have not.
The third danger is that of confusing political cooperation with the functions of NATO. We have seen that political co-operation in the EEC can sometimes produce a view, such as that on the Middle East, that is different from that of the United States. That is all well and good, but there is an increasing danger that political co-operation within the Community will try to cover defence and security matters. If there is to be co-ordination of defence and security policy, it must be within the NATO context, not in the Common Market, if only for the simple reason that NATO includes the United States—a pillar of the Western Alliance—and the EEC does not. We must avoid confusion and overlapping. We must keep the Common Market out of defence and security matters and retain NATO for the discussion of those important issues.
There is a gap to which I must draw the Minister's attention. Where do the United States, Britain and other Western European powers jointly discuss foreign policy? At the moment, there is no machinery for such discussions. Political co-operation in the EEC does not cover our friends across the Atlantic. The NATO council excludes several nations that are in the Common Market. Nor does it cover wider political issues.
There is an urgent need for new political consultation machinery at ministerial level to cover our friends across the Atlantic. We saw much confusion about Poland when Solidarity was banned and the military took over. It was discussed within both NATO and the Common Market. There was a great deal of confusion in the Western Alliance as a result of that division of discussion and responsibility. I hope that the Minister will say something about the Government's thinking on the matter for the future.

Mr. Teddy Taylor: Most hon. Members attend all debates on European matters. Nevertheless, they tend to be rather similar. I hope that the Minister, his colleagues in the Foreign Office and the rest of the Government will realise that there has been one difference today—the majority of Conservative Back Benchers do not agree with the Government's approach to Europe. Indeed, they want major structural change. They disapprove of moves towards any type of political union or federalism. Perhaps the Government will note that there is a Conservative amendment and that the majority of Conservative Back Benchers do not agree with the way that the Government are going.
I hope that the Minister of State will accept a few points. First, with regard to reform, the six months have been a complete non-event. We have always talked of the need to reform the CAP and the budget. The past six months were different because there were not just the usual words; there was a mandate. It was decided that such reform had to take place by a given date. Far from reforming the CAP, we agreed to higher price rises than even the Commission suggested. Moreover, surpluses will be much higher.
How on earth do the Government believe that we will achieve any reform in the CAP when we have not done so in the circumstances of the past few months? How on earth will we reform the budget? The Prime Minister has worked hard to get rebates, but once again, we must now pay £500 million net per year.
My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) tells us in every debate on these matters about the wonderful so-called European money that is being spent in the North-West where there is almost the highest unemployment in Europe. Because of the silly funds, for every pound that the EEC spends on sewers in Lancashire and elsewhere the British taxpayer must pay £1·72. Without the silly funds and money going back and forth, we could spend an extra £3,000 million on the sewers of Lancaster and the problems in Perth and East Perthshire that exist in spite of the excellent way in which my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) represents that area.
There has been no progress with the food mountains. Does the Minister appreciate that it has just been revealed that the Common Market spends £8 million every day on exporting cheap food to third countries? That is a staggering amount. It means that since we started the debate, the Common Market has spent about £3 million of our money ensuring that foreigners have much cheaper food than we can supply to our own people. We know that that is wrong.
It is scandalous that the Russians should be propped up with so much money. In every debate the Government say that that is wrong and that something must be done about the cheap food that is going to Russia. What has happened? Two years ago almost 1 million tonnes of cheap food went to Russia. We were told that that was an outrage. Everyone from the Foreign Office to the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) was going to get that sorted out. We were told that the exports would be restricted to traditional levels. In 1980 the figure was not 1 million, but 2 million tonnes. The figure in 1981 was not 2 million tonnes but 3 million tonnes, so the exports of cheap food to Russian have soared.
There has been no reform or movement. The most worrying aspect is trade and jobs. I hope that the Minister will comment on that. We were told that jobs would be safer in the Common Market. We have seen what has happened. We used to sell as much to Europe in manufactures as it sold to us. That was a good and pleasant relationship. We had a profit in trade and manufactures in every one of the 10 years before we joined the Common Market. However, the situation has become worse until last year with Germany alone we had a deficit of about £2,000 million, double the deficit with Japan.
The Minister kindly revealed to me only the other day that over the past six months our deficit in manufacturing trade was £ll million a day with the Common Market. Our profit with the rest of the world was £15 million a day. That represents many jobs. If Europe is selling us £l1 million more in manufacturing trade per day then we are selling to it, that means a lot of jobs. It sickens me when we are told about the tens of thousands of jobs that have been lost in Britain because of Japanese exports.
Conservatives must rethink the issue of the Common Market. The Labour Party is doing so. There is a splendid article by Bob Rowthorn in Marxism Today. He said that Socialists now realised that the way to achieve Socialism was to stay in the Common Market. Let the Government

look at New Socialist, where Francis Cripps and 'Terry Ward, two of the closest supporters and advisers of the right hon. Member for Bristol, South-East (Mr. Benn), say that the EMS should be supported and expanded. The CAP is a splendid thing, they say, if we could have a similar industrial policy.
Let the Government look at the article in New Statesman, where Ann Clwyd says why she now supports the Common Market. It is time that the Conservative Party realised that many of the hard Left believe that they can achieve real Socialism in Britain by staying in the Common Market, on the present relationship. It is time that we started rethinking, just as Labour's Left is now doing.

Mr. Guy Barnett: The document that we have been debating and the amendment tabled by my right hon. and hon. Friends has enabled the House to have a wide debate. I have listened with great interest to the majority of speeches.
The debate has centred, inevitably, on the three objectives that Lord Carrington set out at the beginning of the British Presidency and which my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) quoted. Those objectives were to deal with three main problems: first, the costs and surpluses that arise from the common agricultural policy; secondly, the proportion of the budget that is currently spent on agriculture; and, thirdly, the unacceptable aspect of the budget, which creates an inequitable situation between member States, especially for the United Kingdom. The issues are of major concern to us in Britain and have been mentioned repeatedly during the debate.
Other matters have come up during the debate. I hope to refer to some later. The hon. Member for Southend, East (Mr. Taylor) referred to trade and employment. Fisheries, which was debated in the House last week, was also mentioned. I listened, as everyone did, with interest to the right hon. Member for Down, South (Mr. Powell) speaking about the degree to which political co-operation as an objective is a process that is designed to lead, and will lead inevitably, if unchecked, to political union.
I shall spend a little time on the CAP and the budget, because the targets of the then Foreign Secretary were unrealistic and have subsequently proved to be so. My hon. Friend the Member for Swindon (Mr. Stoddart) mentioned the fact that time and again, before we went into the EEC and (luring the referendum, we were assured by those who were in favour of entry that we would be able to alter the Common Market from inside and that that was why we should go in.
The argument was that we would be able to alter the Common Market to suit our own priorities and requirements. I find it surprising, therefore, to see the amendment tabled by the hon. Member for Faversham (Mr. Moate) and others and to hear him suggesting dial: it is still possible, after all our experience so far, to change the terms of membership of the EEC. Does the hon. Gentleman really believe that he is talking in practical terms?
We were told years ago, before we entered, that: we could change the EEC from inside, but the common agricultural policy remains intact. The Continental system


of industrial preference remains, and so does a budget contribution mechanism that is designed to exact from the United Kingdom a disproportionately heavy contribution.
What makes matters worse—and this has properly been mentioned over and over again—was what happened on 18 May, when the Luxembourg compromise was overruled. Far from making progress during our Presidency, and subsequently, matters have become even worse.
I read with interest an article in The Sunday Times of 23 May by Ronald Butt. He quoted an anonymous senior Conservative Back Bencher who said:
All Government statements when we went into the Community, and my own speeches, assumed that the ultimate safeguard of the veto in our national interest was there. I would never have been able to persuade my constituents, or myself, that it was right to join but for the veto.
I hope that that senior Back Bench Conservative agrees with the amendment tabled by the hon. Member for Faversham, because the Minister of State gave no assurances today. Many other hon. Members including my hon. Friend the Member for Newham, North-East (Mr. Leighton) agree with me on that.
In answer to my question on 7 July the Minister of State said that since 18 May the Luxembourg convention had not been breached again—that was remarkable, for one or two weeks—and that what counted was how decisions were taken in future. We all agree on that. However, the fact is that the convention has been breached, and what worries me and many other hon. Members is that, after all the huffing and puffing from the Government immediately after 18 May, things have gone remarkably quiet. Therefore, I suggest that Conservative hon. Members who think that there is a real chance of changing the Common Market from the inside should think seriously again.
It has been suggested that we should take some comfort from the fact that the share of budget resources now devoted to agriculture has declined. I believe that that is due to temporary factors in world markets, which has enabled the EEC to cut export subsidies paid to dump surpluses on world markets. The evidence is that the long-term picture is bleak.
A study recently completed by British and American economists at Stamford University shows that the budgetary cost of the common agricultural policy is likely to rise by the end of this decade from about 11 billion or 12 billion ECU's to nearly 44 billion ECU's. That is a threefold increase. It typifies the mad logic of the whole common agricultural policy. It is illustrated by the farm settlements of last year and this year. There is no escape from that.
Every European country has institutionalised farm lobbies, with ministries to take account of their interests. A mechanism is built into the whole system for the creation of surpluses. Our membership of the Common Market commits us to a system that guarantees the creation of agricultural surpluses as a means of raising the incomes of farmers in Europe, in some cases to extremely high levels. It also commits us to the disposal of those surpluses on to world markets, dumped at subsidised prices, thus depressing world prices and destroying the livelihood of farmers in the Third world.
My hon. Friend the Member for Newham, South (Mr. Spearing) referred to the degree to which subsidies are used in the disposal of surpluses to countries behind the

Iron Curtain. That is serious enough, but I find much more serious the disposal of surpluses on to world markets that depress world prices and have such damaging effects on people in the developing world who are trying to earn a living.
In no case is that more serious than with sugar. Several of the poorer countries export over 80 per cent. of their sugar production, and for many of them it is a major source of employment. It is subject anyway to the devastating consequences of fluctuations in the international sugar market. World sugar stocks, at the end of 1981–82, are forecast to have been at 36 per cent. of world consumption—the highest figure ever.
Between 1971 and 1977 the Common Market contributed to a quarter of world sugar production increase through the planting of beet. It subsidises beet production, it protects beet sugar producers against cane producers in the Third world, and it still refuses to sign the international sugar agreement, although it benefits from it as a free rider. One illustration of the result is that in the second half of 1979 Jamaica needed to produce 2·7 times as much sugar to buy exactly the same amount of manufactured goods as it did in 1970.
Another example of the serious effect of the common agricultural policy on the Third world is in terms of food aid. Katherina Focke, in a report which I believe she made to the European Assembly, made the following damning comment on the Community's food aid policy. She said that it
is dictated by agricultural interests rather than any intention to promote development; it is an inefficient way of distributing European surplus production to the poorer countries, associated with high costs, countless mishaps, delays, wrangling over responsibility and bureaucratic obstacles.
A Select Committee in another place on the European Communities' report on "Development Aid Policy" points up the damaging effect which indiscriminate distribution of food surpluses can have in the Third world. The report says:
Although the dangers of food aid can be avoided, the way in which the EEC proceeds to give food aid makes it as difficult as it can be to ensure that the negative effects are avoided and positive effects are attained.
What it does, in effect, is to depress prices in the countries where it is distributed, bankrupt local farmers, who are desperately trying to make a living and to help themselves, and at the same time fails to meet the needs of those who are really starving. So long as we remain a member of the EEC, we are a party to those policies and we are helping to pay for them.
The right hon. Member for Crosby (Mrs. Williams) says from time to time that withdrawal from the Common Market by Britain would involve a retreat from internationalism. I am interested to note her absence this evening, and that of the dog that did not bark in the night, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who ought to have been here to defend the EEC. I heard the right hon. Member for Crosby make that remark about retreating from internationalism when thousands of people came to the House to lobby us about the Brandt report. But this is not internationalism. At worst it is international brigandage. At best it is an attempt to move not towards internationalism but towards the creation of a larger country—a sort of economic autarchy—regardless of the cost that it imposes and the damage that it does to some of the poorest people in the world.
I shall be told that there is the Lomé convention, which guarantees access to the products of the ACP countries. A recent accession to the Lomé convention as a new ACP country is Zimbabwe, also a new member of the Commonwealth. The House should hear what the Prime Minister of Zimbabwe said about the Common Market's treatment of the Third world, particularly through the Lomé convention and the way it affects his country. This is a quotation from The Times dated 28 May:
Mr. Robert Mugabe, Prime Minister of Zimbabwe, told the European Commission that his country was 'gravely concerned by the protectionist measures adopted by the Community', in restricting some exports from Lomé Convention countries to the EEC.
This, he said, was a clear violation of the commitment entered into under the terms of the convention. Maize, wheat, bran and offal were all affected by these measures, he said, while tariffs on Lomé exports of cocoa and butter, and safeguard measures on poultry exports, were also contrary to the conventions.
The result of this, he said, was that the Lomé share of EEC markets had fallen from 7 per cent. to 5·5 per cent. in a year, while the EEC increased its exports to the Lomé market by 4 per cent. over the same period. This, in turn, had limited the investment capacities of the Lomé states, and made urgent corrective measures necessary".
I repeat that so long as we remain in the Common Market we are parties to those policies and are paying for them. It forces us to discriminate against Commonwealth countries in a host of ways.
One of the most damaging forms of discrimination—damaging in terms of good relations between this country and Commonwealth countries—is the treatment of overseas students. The Government have instituted a system of full costs for overseas students, involving tuition fees of between £2,000 and £3,000 a year, despite opposition from Labour Members. If a student is not supported by the ODA, the British Council, or under the Commonwealth Fellowship plan, he or she has to pay the full cost—unless, of course, the student comes from the Common Market or from a French dependent territory such as Martinique. Then the student pays only about £700. If the student comes from Hong Kong or the Falkland Islands, he or she has to pay the full cost.
I have some interesting figures which show that between 1979–80 and 1980–81 there was an 11 per cent. increase in EEC-based students, a 43 per cent. drop in students from the Caribbean, and a 24 per cent. drop in students from the Third world Commonwealth as a whole. Is that internationalism? Does it show any regard for the education needs of the Third world?
I am glad that my hon. Friend the Member for Swindon mentioned the Falkland Islands. The Common Market received much publicity for the grudging support that it gave us during that period. The right hon. Member for Hillhead made this remark in an article in The Guardian of 7 June:
We should have been aware that the Community thought we owed them some gratitude over Argentine sanctions.
I contrast that with the remark that was made by the Secretary-General of the Commonwealth, Shridath Ramphal, speaking on behalf of many desperately poor countries in the world which backed us to the full, along with New Zealand, Australia and many others:
In making a firm and unambiguous response to Argentine aggression Britain is rendering a service to the international community as a whole".

Mr. Normanton: May I put to the hon. Gentleman a situation that could arise? Let us suppose that Britain were to withdraw from the European Community. Is the hon.

Gentleman seriously and honestly saying that the developing countries that are members of the Lomé convention would come out of the convention and sever their relationship with the Community and align themselves with us? If the hon. Gentleman thinks that, he is living in a world that is divorced from reality.

Mr. Barnett: I am not saying that those countries would tear up the Lomé agreement. In so far as it is of any benefit to them, hope that they will continue to operate in Lomé, but I hope that we, having come out of the EEC, would give better terms to the Third world than the Common Market does. However, I shall say more on that subject in a moment.
The Opposition amendment refers, very properly, to British interests. Perhaps the most serious damage done to our interests has been in trade. I am glad that the Minister for Trade is on the Front Bench. Normally, Britain imports nearly half of its food and most of its raw materials and pays for them by earning a surplus in manufactures. Therefore, we must trade predominantly with those countries that find it cheaper to buy their manufactures from us rather to make them themselves, or we must trade with countries that can sell us food more cheaply than we can grow it.
The EEC countries do not belong in either of these categories. Nearly all of our natural trading partners are Commonwealth countries. That is a fact that has nothing to do with political sentiment or trading preference. Politically motivated interference with natural trading patterns can only damage our economy and since we entered the EEC the evidence is that it has done so. It is remarkable that our trade with the rest of the world in 1980 was £5,000 million in surplus, although we no longer enjoy preferential treatment there and are denied the chance of giving non-EEC countries reciprocal advantages in the EEC markets.
It is right that our amendment should deal with British interests, but the debate is about something more fundamental. A well-known gentleman, Mr. Mansholt, said:
The Common Market is not just about the price of butter.
We joined the Common Market at a time when Britain was losing its position and influence in world affairs and when we felt our political and economic power slipping away. We made a fundamental mistake then, but today our membership of the Common Market is irrelevant, not merely to our interests, but to the contribution that we should be making in a dangerous and divided world. There are mounting problems of poverty, deprivation, unemployment and insolvency in the Third world, and what do we do? We belong to an association that ensures that our market gives preference to Common Market producers over Third world producers. We subscribe to a system that results in the disposal of surpluses in world markets, which makes it more and more difficult for Third world countries to make a living for themselves and to solve their problems of economic and social development.
That is not internationalism, but the creation of a larger nationalism—a "fortress Europa". R.H. Tawney said:
A poor society cannot be too poor to find a right order of life, nor a rich society too rich to have need of it.
That is the issue, and that is why I support the Labour Party's policy to seek disengagement from the Treaty of Rome.

The Minister for Trade (Mr. Peter Rees): After an interval of some years, it is a great privilege for me to take part in a debate on the European Community. It is an important subject. We have had a coruscating debate and a charming consistency in the views of most of those who have taken part. I have taken the precaution of reading the most recent debates, for example, on the Genscher-Colombo proposals, on fisheries policy and earlier reports on Community affairs. The same names appear and the views expressed do not alter perceptibly, which perhaps adds substance to them. We must refine those opinions during the debates.
I turn, first, to the contribution by the hon. Member for Liverpool, Walton (Mr. Heifer), who rode tandem with his hon. Friend the Member for Greenwich (Mr. Barnett). They identified certain weaknesses in the Community that this Administration recognise, as doubtless did previous Labour Administrations. As is evident from the document before us, we hoped to correct those weaknesses during our Presidency and, as we did not entirely succeed in so doing, we hope to do it in the years to come. We set out with high hopes, but a Presidency lasts for only six months, which is rather less than the parliamentary year. If we reflect on how much or how little we achieve during one Parliament, it may put our efforts in one Presidency into slightly better perspective.
I readily concede that we need fundamental changes in the common agricultural policy, the budget and the direction of resources into industry and services. Those points were made by both Opposition spokesmen and by many right hon. and hon. Members on both sides of the House.
I am always a little surprised by the contributions from the Opposition Front Bench, because there is total amnesia about the renegotiation in 1975. I recognise that the hon. Member for Walton has a stainless record on that matter and that the hon. Member for Greenwich was not a member of that Administration. It must have been hard for the Shadow Cabinet to find two Members who could speak with such robustness about the problems but who did not carry the burden of what was apparently not achieved in those renegotiations.
I remind the House—although it may not be necessary—of what the right hon. Member for Huyton (Sir H. Wilson) said in his opening speech on 7 April 1975:
My judgment, on an assessment of all that has been achieved and all that has changed"—
that is as a result of negotiations
is that to remain in the Community is best for Britain, for Europe, for the Commonwealth, for the Third World and the wider world".—[Official Report, 7 April 1975; Vol. 889, c. 837.]

Mr. John Silkin: He was wrong.

Mr. Rees: The right hon. Gentleman says that the right hon. Member for Huyton was wrong. It is easy to disown one's former leaders.

Mr. Guy Barnett: I voted against it.

Mr. Rees: All credit to the hon. Gentleman, but he was in a small minority in the Labour Party at that time.

Mr. Jay: Does the Minister recall that not only did my hon. Friend the Member for Greenwich (Mr. Barnett) and I vote against the proposals, but that the Conservative Party voted wholly in favour of them?

Mr. Rees: We certainly did, and there is no shame in that. We recognised that, as the right hon. Member for Huyton said, to remain in the Community would benefit Britain, Europe and—I say this to the hon. Member for Greenwich—the wider world.
How shall we approach the problem in future if, contrary to my hope and expectation, a Labour Government are returned to power at the next general election? The hon. Member for Walton owes it to the House and certainly to the hon. Member for Bolsover (Mr. Skinner) to give a clearer statement of the Labour Party's position.
The hon. Member for Greenwich made special play of the problems of overseas students. He will know that the Overseas Students Trust produced a paper that has been considered carefully. It is not for me to forecast the result of the consideration, but there could be an amelioration of the position.
As to sugar, the hon. Gentleman will be aware that the Foreign Affairs Council agreed in January to an increase in the price offered for ACP sugar this year from 7·5 per cent. to 8·5 per cent. We shall remain closely in touch with the international sugar organisation about the development of the international sugar agreement, but, as no changes seem to be proposed to the structure, we are bound to have reservations about the result of the agreement.
The intervention of the right hon. Member for Down, South (Mr. Powell) was coloured by his special brand of sardonic wit and his fastidious preoccupation with language. His argument appeared to be that it was idle to try to reconcile the foreign policies of Community members unless there was an institutional framework. Unless one has such a formal link, no weight could be given to the views and they would simply be a coincidental expression of opinions by the member States. I did not grasp the force of that argument. It would still be to our advantage and to that of the world to know that ten countries of comparable outlook, with strong economic ties through the Community, could approach a problem with the same view and with the same objective in mind.
I know that the right hon. Gentleman is always keen to see that form is matched to substance, but in this instance I should have thought that there was plenty of substance underlying the co-ordination of our foreign policy. Nor could I accept his proposition, either in logic or fact, that everything gained by the Community is necessarily something lost to the House.
My hon. Friend the Member for Faversham (Mr. Moate) was courteous enough to tell me that he would not be here for the wind-up speeches. He, like many other hon. Members, touched on the palpable breach of the Luxembourg compromise, about which there can be no argument. The position was clearly, lucidly and adequately covered by my right hon. Friend the Minister of State when he opened the debate. However, we expect to see this convention continue.
It is not for me to speculate on the precise position of those who have breached the compromise, but I imagine that they will reflect on the implications of what has occurred. It may be necessary to reconsider in the future what constitutes a vital national interest in this context.

Mr. Marlow: I am grateful to my hon. and learned Friend for giving way. He is very courteous to do so at this stage. Is he aware that the House and the country joined the Community on the basis of the Luxembourg


compromise operating? There is no doubt about that. We have discovered now that it does not operate. Is it not time that the Government did something about that?

Mr. Rees: I recall, perhaps more clearly than my hon. Friend since I was in the House at the time, the statement made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). I recall the important part that he took in those debates. However, I think my hon. Friend the Member for Northampton, North (Mr. Marlow) is jumping to conclusions rather hastily in assuming that the compromise is entirely defunct. I suspect that we shall find that it still has considerable validity and will govern the debates in the Community. If it turns out to be defunct, that is a different position, which we shall have to reconsider.

Mr. Heffer: Will the hon. and learned Gentleman clarify one point, which is of great importance? The Government have, on a number of occasions, made a clear statement that they intend to stand by the Luxembourg compromise and accept that it is an agreement to disagree. We do not know quite what that means, but apparently it means that they want to accept the previous position. Is the hon. and learned Gentleman now saying that the Government are moving away from that clear statement to the House? Surely that is the Government once again giving way under pressure from the rest of the Common Market?

Mr. Rees: Nothing like that can be construed either out of what I have said or out of what my right hon. Friend has said. My right hon. Friend may have put it a little more eloquently, at greater length and more clearly than I have. However, I rest on what he and I have said. If the hon. Member for Walton has any doubt, he can study Hansard tomorrow.
I shall now answer some of the points made by the hon. Member for Newham, South (Mr. Spearing).

Mr. Stoddart: rose—

Mr. Rees: Time is rather against us. I have given way a great deal already. I shall come to the contribution of the hon. Member for Swindon (Mr. Stoddart).

Mr. Jay: rose—

Mr. Rees: I know that the right hon. Member for Battersea, North (Mr. Jay), with commendable patience, has sat through much of the debate without contributing. Perhaps he will allow me to proceed a little further.

Mr. Jay: This is a matter of some importance. The hon. and learned Gentleman said that he had made the matter clear. He said that the Luxembourg compromise was not entirely defunct. Is it now the Government's policy that it is only partially defunct?

Mr. Rees: I was merely stating my view of a set of circumstances and facts that had nothing to do with Government policy. I was merely asked to respond—

Mr. Ioan Evans: rose—

Mr. Rees: I shall not give way on this point any more. Otherwise, I shall not be able to do justice to the contributions of hon. Members. In addition, if time permits, I have one or two small things to say on my own account. Surely that is permitted to the Minister who replies.
The hon. Member for Newham, South asked whether the Community could impose any fresh taxes that would

be binding on Britain without the authority of the House. The answer is clearly "No". That would have to be by the unanimous decision of the Council of Ministers, ratified by the House. I hope that will reassure the hon. Gentleman.

Mr. Spearing: rose—

Mr. Rees: No, I shall not give way. I have made the position clear. I could not have made it clearer.

Mr. Spearing: I did not ask that question.

Mr. Rees: It is the hon. Gentleman's good fortune that he has attributed to him an important constitutional point. He will now be better informed and will not have to raise it on another occasion.

Mr. Spearing: rose—

Mr. Rees: We have heard from the hon. Member for Newham, South in Common Market debates on many occasions. I hope that he will now allow me to continue.

Mr. Spearing: rose—

Mr. Rees: I am not giving way to the hon. Member for Newham, South. I could not make my position clearer.

Mr. Spearing: The hon. and learned Gentleman dare not give way.

Mr. Rees: The hon. Member for Hackney, South and Shoreditch (Mr. Brown)—speaking I assume on behalf of the Social Democratic Party—raised several specific points. His first point concerned the anti-poverty programme that is discussed in paragraph 9.11. That was considered by the Council of Ministers in the spring. It is a small but valuable programme to which the Government certainly subscribe.
The hon. Gentleman then raised the Community energy strategy that is referred to in paragraph 10.4 That was considered at the Council of Energy Ministers this month, and useful conclusions were reached on coal. More work has to be done on a coal programme that would certainly benefit the United Kingdom as Western Europe's largest coal producer. The hon. Gentleman also touched on the Vredeling report. I cannot promise progress on that highly controversial report. I do not think that the Government would subscribe to many of the propositions enshrined in it.
The hon. Member for Newham, North-East (Mr. Leighton), as one would expect, raised many points. He attempted to suggest that my right hon. Friend the Minister of Agriculture, Fisheries and Food was selling out the British fishing industry. I reassure the hon. Gentleman and the House that the Minister has kept closely in touch with the fishing industry and, in negotiating, he has its full support.
The hon. Gentleman also referred to Japan, which leads to some general points on trade to which I hope the House will let me turn. My hon. Friend the Member for Southend, East (Mr. Taylor)—to whose contribution I hope that I shall have time to come if interventions allow—said that the imbalance in our trade with Germany is about the same as the imbalance in our trade with Japan. However, there are two fundamental differences to which I would draw the attention of the House.
First, the Japanese penetration of our market is in one or two narrow sectors and is therefore rather more destructive to British industry than is that of Germany.


Secondly, the German market is open to our exporters, while we have considerable reservations about the difficulties encountered by British exporters in the Japanese market. There is a great range of barriers and difficulties to be encountered there.
It has been the Government's consistent policy as part of the European Community to bring pressure to bear on our friends in Japan to ensure that we have the same free access to their markets as they have to ours. As a result of that pressure during the United Kingdom Presidency, an emergency import package was announced by the Japanese Government to reduce the surplus on its current account, and there was a clear statement of its intention to introduce the tariff reductions agreed in the Tokyo round two years earlier than planned.
Beyond that, an ombudsman was appointed to handle complaints by foreign companies. I hope that British companies will take advantage of that. Subsequently, just before the Versailles summit this summer, Prime Minister Suzuki announced a further package of measures. He has publicly encouraged the import of goods and has set up an inquiry into Japanese distribution networks. In the case of Japan and, indeed, in relation to other trade questions, the United Kingdom carries more clout as a member of the European Community than it would do on its own.
I was happy to hear the commendation of my hon. Friend the Member for Cheadle (Mr. Normanton) of the United Kingdom's Presidency. My hon. Friend speaks with great authority on these matters. He suggested that the United Kingdom has not yet learnt adequately how to influence events in the European Community. One of the biggest disadvantages from which we suffer is that a major party in our parliamentary system still seems not to have learnt the true lessons of our adherence to the Common Market and still seems dedicated to taking us out. The precise terms on which we would be taken out must be explored in any way open to us.
The hon. Member for Waltham Forest (Mr. Deakins) drew particular attention to the trade figures. The hon. Gentleman asked why Department of Trade Ministers boasted of an increase in our trade. I am not conscious of having boasted of any increase in our trade with the European Community. I merely stated it as fact to underline the importance of the European Community as a market for our industry and the people who work in it.
Hon. Members will have studied with admiration the powerful article in The Times today of my hon. Friend the Member for Southend, East. My hon. Friend has also produced a great pamphlet for the Monday Club. He and the hon. Member for Walton should perhaps get together. The hon. Member for Walton and his right hon. and hon. Friends have their reservations about the European Community. They feel that it will impede the introduction of full blooded Socialist policies. My hon. Friend the Member for Southend, East seems to feel that our membership of the European Community will facilitate the introduction of these policies. It is difficult for me to intervene in this specialised debate.

Mr. Teddy Taylor: Why does not the Minister extend his reading? If he reads New Socialist and Marxism Today, he will see that a great fundamental change is

taking place on the extreme Left of the Labour Party where it is realised that the real road to Socialism lies through institutions like the CAP, which is a Socialist nonsense.

Mr. Rees: Why bother to read the backroom boys when we can hear it all from the Front Benches? This is a specialised debate that I feel I should leave to the hon. Member for Walton and my hon. Friend the Member for Southend, East to resolve between themselves.
I wish to refer briefly to steel. I regret that there is not more time available. The United States Administration has imposed countervailing duties on the products of a number of Western European steel companies and is in the middle of an anti-dumping investigation. In the case of the United Kingdom, these duties affect principally the British Steel Corporation but also some private producers. The countervailing tariff in respect of the British Steel Corporation amounts to 40 per cent. It would, I believe, if not modified or rescinded, effectively shut out about 200,000 tonnes of British Steel's exports to the United States.
While we recognise that the United States' steel industry is, in a period of world recession, going through a difficult time, we cannot accept that debts written off by Her Majesty's Government or moneys introduced into British Steel by the British taxpayer to restructure it and to reduce its capacity from 24 million tonnes a year to about 13½ million tonnes and to halve its work force can be regarded in any sense as a subsidy to exports to the United States. Such a view would, we feel, involve a travesty of the facts. I stated as much to Commerce Secretary Baldrige who, it will interest the House to know, commended, in a speech that he made recently to Congress, what the British Steel Corporation has done.
Intense representations have been made by European steel companies, by individual Governments and by the Commission to the United States Administration but so far, I regret, without success. A further attempt by the five European countries most directly affected, including the United Kingdom, and orchestrated by the Commission, will be undertaken during the next few days to beat the American legislative deadline on 24 July. I cannot predict the outcome of that attempt.
The Community is extremely disturbed by that and other transatlantic trade developments. The Community has raised at GATT those countervailing duties as contravening GATT rules. At my insistence the European Community will also raise a new United States copyright law which has just passed through Congress over a presidential veto. It will have the effect of restricting the printing of many English language books sold in the United States of America. We regard that as a damaging and protectionist measure. Finally, there is the trans-Siberian pipeline. I emphasise that while we share their detestation of what happened in Poland, and the principles, practices and policies of the USSR, we feel that the burden of any economic measures taken against the Soviet Union should be shared fairly.
The Government were not slow earlier in the year to put together a tough package of economic measures aimed at both Poland and the Soviet Union, but we object strongly to the introduction by the United States Administration of measures which are extra—territorial and retrospective in their effect without full and detailed consultation. For that


reason we have activated the first part of the Protection of Trading Interest Act. If the position requires it, we shall not hesitate to bring that Act fully into effect.
It is evident that the European Community—I know that the Opposition may have reservations—is the central focus for Great Britain's trade. During the past decade our exports to the Community grew at twice the pace of those to the outside world. I state that as a fact, not a boast, because it reflects no particular credit on me or the Government. Exports reached a level of over £20½ billion in 1980. British industry has carried out a more far-reaching reorganisation over the past 30 years than any country in Europe. It has involved massive changes, as the more technologically demanding markets of Western Europe have taken the place of the relatively less sophisticated markets of the Commonwealth in their importance to our trade and economy.
However one regards the aspirations expressed by the hon. Member for Greenwich, that is commercial fact, and we should fly in the face of reality if we imagined that that trend could be reversed without considerable damage to British industry, as has been pointed out by the CBI. The Opposition Front Bench owe it to the House and the country to explain clearly what their policy is. Is it, as stated by their discussion paper, to which the hon. Member for Walton put his name in July 1981, to withdraw without further ado if they are returned to power, and to negotiate an agreement with the European Community afterwards? I shall willingly give way to the hon. Member for Walton if he will clarify that. Is it now the Opposition's declared policy that in the event of the Labour Party forming the next Government it will, without negotiation, withdraw the United Kingdom from the European Community?

Mr. Heffer: The hon. and learned Gentleman obviously did not listen to my speech. I made it absolutely clear that we reject outright withdrawal, and that we would negotiate our withdrawal from the Common Market on the basis of proper agreements. That is what I said.

Mr. Rees: The hon. Gentleman and his hon. Friends have possibly been influenced by the admirable pamphlet produced by the Labour Group for Europe which I believe talks more sense than the Opposition Front Bench. On another occasion the hon. Gentleman must tell the House with more candour than he has tonight exactly what terms he and his hon. Friends would stand out for, which they feel that they would be able to negotiate with the European Community.
The amendment in the name of the official Opposition is characteristic of a party which is divided on fundamental issues, which is incapable of reconciling its differences and which has demonstrated clearly that it is not fit to be entrusted with the responsibilities of government. I invite the House to reject the amendment with contempt.

Question put, That the amendment be made:—

The House divided: Ayes 209, Noes 322.

Division No. 287]
[10 pm


AYES


Adams, Allen
Benn, Rt Hon Tony


Anderson, Donald
Bennett, Andrew (St'kp't N)


Archer, Rt Hon Peter
Bidwell, Sydney


Ashley, Rt Hon Jack
Booth, Rt Hon Albert


Ashton, Joe
Boothroyd, Miss Betty


Atkinson, N. (H'gey,)
Bottomley, Rt Hon A.(M'b'ro)


Bagier, Gordon A.T.
Bray, Dr Jeremy


Barnett, Guy (Greenwich)
Brown, Hugh D. (Provan)


Barnett, Rt Hon Joel (H'wd)
Brown, R. C. (N'castle W)





Brown, Ron (E'burgh, Leith)
Jay, Rt Hon Douglas


Buchan, Norman
John, Brynmor


Callaghan, Jim (Midd't'n &amp; P)
Johnson, James (Hull West)


Campbell, Ian
Johnson, Walter (Derby S)


Campbell-Savours, Dale
Jones, Rt Hon Alec (Rh'dda)


Canavan, Dennis
Jones, Barry (East Flint)


Carmichael, Neil
Kaufman, Rt Hon Gerald


Carter-Jones, Lewis
Kerr, Russell


Clark, Dr David (S Shields)
Kilfedder, James A.


Clarke, Thomas C'b'dge,
Kilroy-Silk, Robert


A'drie
Lambie, David


Cocks, Rt Hon M. (B'stol S)
Lamond, James


Coleman, Donald
Leadbitter, Ted


Concannon, Rt Hon J. D.
Leighton, Ronald


Conlan, Bernard
Lewis, Arthur (N'ham NW)


Cook, Robin F.
Lewis, Ron (Carlisle)


Cowans, Harry
Litherland, Robert


Cox, T. (W'dsw'th, Toot'g)
Lofthouse, Geoffrey


Craigen, J. M. (G'gow, M'hill)
Lyon, Alexander (York)


Crowther, Stan
McDonald, Dr Oonagh


Cryer, Bob
McElhone, Frank


Cunliffe, Lawrence
McKay, Allen (Penistone)


Cunningham, Dr J. (W'h'n)
McKelvey, William


Dalyell, Tam
MacKenzie, Rt Hon Gregor


Davidson, Arthur
McNamara, Kevin


Davies, Rt Hon Denzil (L'lli)
McWilliam, John


Davis, Clinton (Hackney C)
Marks, Kenneth


Davis, Terry (B'ham, Stechf'd)
Marshall, D (G'gow S'ton)


Deakins, Eric
Marshall, Dr Edmund (Goole)


Dean, Joseph (Leeds West)
Marshall, Jim (Leicester S)


Dewar, Donald
Martin, M (G'gow S'burn)


Dixon, Donald
Mason, Rt Hon Roy


Dobson, Frank
Maxton, John


Dormand, Jack
Maynard, Miss Joan


Dubs, Alfred
Meacher, Michael


Duffy, A. E. P.
Mikardo, Ian


Dunnett, Jack
Millan, Rt Hon Bruce


Dunwoody, Hon Mrs G.
Miller, Dr M. S. (E Kilbride)


Eadie, Alex
Mitchell, Austin (Grimsby)


Eastham, Ken
Molyneaux, James


Edwards, R. (W'hampt'n S E)
Morris, Rt Hon C. (O'shaw)


Ellis, R. (NE D'bysh're)
Morris, Rt Hon J. (Aberavon)


English, Michael
Morton, George


Evans, Ioan (Aberdare)
Moyle, Rt Hon Roland


Ewing, Harry
Newens, Stanley


Faulds, Andrew
O'Neill, Martin


Field, Frank
Orme, Rt Hon Stanley


Flannery, Martin
Park, George


Fletcher, Ted (Darlington)
Parker, John


Foot, Rt Hon Michael
Parry, Robert


Forrester, John
Pavitt, Laurie


Foulkes, George
Pendry, Tom


Fraser, J. (Lamb'th, N'w'd)
Powell, Rt Hon J.E. (S Down)


Garrett, John (Norwich S)
Powell, Raymond (Ogmore)


Garrett, W. E. (Wallsend)
Prescott, John


George, Bruce
Price, C. (Lewisham W)


Gilbert, Rt Hon Dr. John
Race, Reg


Golding, John
Radice, Giles


Gourlay, Harry
Rees, Rt Hon M (Leeds S)


Graham, Ted
Richardson, Jo


Hamilton, James (Bothwell)
Roberts, Allan (Bootle)


Hamilton, W. W. (C'tral Fife)
Roberts, Ernest (Hackney N)


Hardy, Peter
Roberts, Gwilym (Cannock)


Harrison, Rt Hon Walter
Robertson, George


Hart, Rt Hon Dame Judith
Robinson, G. (Coventry NW)


Hattersley, Rt Hon Roy
Rooker, J. W.


Haynes, Frank
Ross, Ernest (Dundee West)


Healey, Rt Hon Denis
Rowlands, Ted


Heffer, Eric S.
Ryman, John


Hogg, N. (E Dunb't'nshire)
Sever, John


Holland, S. (L'b'th, Vauxh'll)
Sheerman, Barry


Home Robertson, John
Sheldon, Rt Hon R.


Homewood, William
Shore, Rt Hon Peter


Hooley, Frank
Short, Mrs Renée


Howell, Rt Hon D.
Silkin, Rt Hon J. (Deptford)


Hoyle, Douglas
Silkin, Rt Hon S. C. (Dulwich)


Hughes, Mark (Durham)
Silverman, Julius


Hughes, Robert (Aberdeen N)
Skinner, Dennis


Hughes, Roy (Newport)
Smith, Rt Hon J. (N Lanark)


Janner, Hon Greville
Soley, Clive






Spearing, Nigel
Weetch, Ken


Spriggs, Leslie
Welsh, Michael


Stallard, A. W.
White, Frank R.


Stoddart, David
White, J. (G'gow Pollok)


Strang, Gavin
Whitehead, Phillip


Straw, Jack
Whitlock, William


Summerskill, Hon Dr Shirley
Williams, Rt Hon A. (S'sea W)


Thomas, Dafydd (Merioneth)
Wilson, Rt Hon Sir H.(H'ton)


Thomas, Dr R. (Carmarthen)
Wilson, William (C'try SE)


Thorne, Stan (Preston South)
Winnick, David


Tilley, John
Woodall, Alec


Tinn, James
Woolmer, Kenneth


Torney, Tom
Wright, Sheila


Urwin, Rt Hon Tom
Young, David (Bolton E)


Varley, Rt Hon Eric G.



Wainwright, E. (Dearne V)
Tellers for the Ayes:


Walker, Rt Hon H.(D'caster)
Mr. Derek Foster and


Watkins, David
Mr. Hugh McCartney.




NOES


Adley, Robert
Cockeram, Eric


Alexander, Richard
Colvin, Michael


Alison, Rt Hon Michael
Cope, John


Alton, David
Cormack, Patrick


Amery, Rt Hon Julian
Corrie, John


Ancram, Michael
Costain, Sir Albert


Arnold, Tom
Cranborne, Viscount


Aspinwall, Jack
Crawshaw, Richard


Atkins, Rt Hon H.(S'thorne)
Crouch, David


Atkins, Robert(Preston N)
Cunningham, G. (Islington S)


Atkinson, David (B'm'th,E)
Dickens, Geoffrey


Baker, Kenneth (St.M'bone)
Dorrell, Stephen


Baker, Nicholas (N Dorset)
Douglas-Hamilton, Lord J.


Banks, Robert
Dover, Denshore


Beaumont-Dark, Anthony
du Cann, Rt Hon Edward


Beith, A. J.
Dunn, James A.


Bendall, Vivian
Dunn, Robert (Dartford)


Benyon, Thomas (A'don)
Durant, Tony


Benyon, W. (Buckingham)
Dykes, Hugh


Best, Keith
Eden, Rt Hon Sir John


Bevan, David Gilroy
Edwards, Rt Hon N. (P'broke)


Biffen, Rt Hon John
Eggar, Tim


Biggs-Davison, Sir John
Elliott, Sir William


Blackburn, John
Ellis, Tom (Wrexham)


Blaker, Peter
Emery, Sir Peter


Bonsor, Sir Nicholas
Fairbairn, Nicholas


Boscawen, Hon Robert
Fairgrieve, Sir Russell


Bottomley, Peter (W'wich W)
Faith, Mrs Sheila


Bowden, Andrew
Farr, John


Boyson, Dr Rhodes
Fell, Sir Anthony


Braine, Sir Bernard
Fenner, Mrs Peggy


Bright, Graham
Finsberg, Geoffrey


Brinton, Tim
Fisher, Sir Nigel


Brittan, Rt. Hon. Leon
Fletcher, A. (Ed'nb'gh N)


Brocklebank-Fowler, C.
Fookes, Miss Janet


Brooke, Hon Peter
Forman, Nigel


Brotherton, Michael
Fowler, Rt Hon Norman


Brown, Michael (Brigg &amp; Sc'n)
Fraser, Peter (South Angus)


Brown, Ronald W. (H'ckn'y S)
Fry, Peter


Browne, John (Winchester)
Gardner, Edward (S Fylde)


Bruce-Gardyne, John
Garel-Jones, Tristan


Bryan, Sir Paul
Gilmour, Rt Hon Sir Ian


Buck, Antony
Ginsburg, David


Budgen, Nick
Glyn, Dr Alan


Bulmer, Esmond
Goodhart, Sir Philip


Burden, Sir Frederick
Goodhew, Sir Victor


Butcher, John
Goodlad, Alastair


Cadbury, Jocelyn
Gorst, John


Carlisle, John (Luton West)
Gow, Ian


Carlisle, Kenneth (Lincoln)
Gower, Sir Raymond


Carlisle, Rt Hon M. (R'c'n)
Grant, Anthony (Harrow C)


Cartwright, John
Grant, John (Islington C)


Chalker, Mrs. Lynda
Gray, Hamish


Channon, Rt. Hon. Paul
Greenway, Harry


Chapman, Sydney
Griffiths, E.(B'y St. Edm'ds)


Churchill, W. S.
Griffiths, Peter Portsm'th N)


Clark, Hon A. (Plym'th, S'n)
Grist, Ian


Clark, Sir W. (Croydon S)
Grylls, Michael


Clarke, Kenneth (Rushcliffe)
Gummer, John Selwyn


Clegg, Sir Walter
Hamilton, Hon A.





Hamilton, Michael (Salisbury)
Monro, Sir Hector


Hampson, Dr Keith
Montgomery, Fergus


Hannam, John
Moore, John


Haselhurst, Alan
Morgan, Geraint


Havers, Rt Hon Sir Michael
Morris, M. (N'hampton S)


Hawkins, Sir Paul
Morrison, Hon C. (Devizes)


Hawksley, Warren
Morrison, Hon P. (Chester)


Hayhoe, Barney
Mudd, David


Heath, Rt Hon Edward
Murphy, Christopher


Heddle, John
Myles, David


Henderson, Barry
Neale, Gerrard


Heseltine, Rt Hon Michael
Needham, Richard


Higgins, Rt Hon Terence L.
Nelson, Anthony


Hill, James
Neubert, Michael


Hogg, Hon Douglas (Gr'th'm)
Newton, Tony


Holland, Philip (Carlton)
Normanton, Tom


Hooson, Tom
Nott, Rt Hon John


Horam, John
O'Halloran, Michael


Hordern, Peter
Onslow, Cranley


Howe, Rt Hon Sir Geoffrey
Oppenheim, Rt Hon Mrs S.


Howell, Rt Hon D. (G'ldf'd)
Osborn, John


Howell, Ralph (N Norfolk)
Page, John (Harrow, West)


Hunt, David (Wirral)
Page, Richard (SW Herts)


Hunt, John (Ravensbourne)
Parkinson, Rt Hon Cecil


Hurd, Rt Hon Douglas
Parris, Matthew


Irvine, Bryant Godman
Patten, John (Oxford)


Irving, Charles (Cheltenham)
Pattie, Geoffrey


Jenkin, Rt Hon Patrick
Pawsey, James


Jessel, Toby
Penhaligon, David


Johnson Smith, Sir Geoffrey
Percival, Sir Ian


Jopling, Rt Hon Michael
Pink, R. Bonner


Joseph, Rt Hon Sir Keith
Pitt, William Henry


Kaberry, Sir Donald
Pollock, Alexander


Kellett-Bowman, Mrs Elaine
Porter, Barry


Kershaw, Sir Anthony
Prentice, Rt Hon Reg


Kimball, Sir Marcus
Price, Sir David (Eastleigh)


King, Rt Hon Tom
Pym, Rt Hon Francis


Kitson, Sir Timothy
Raison, Rt Hon Timothy


Knight, Mrs Jill
Rathbone, Tim


Knox, David
Rees, Peter (Dover and Deal)


Lamont, Norman
Rees-Davies, W. R.


Lang, Ian
Renton, Tim


Langford-Holt, Sir John
Rhodes James, Robert


Latham, Michael
Rhys Williams, Sir Brandon


Lawrence, Ivan
Ridley, Hon Nicholas


Lawson, Rt Hon Nigel
Ridsdale, Sir Julian


Lee, John
Rippon, Rt Hon Geoffrey


Lennox-Boyd, Hon Mark
Roberts, M. (Cardiff NW)


Lester, Jim (Beeston)
Roberts, Wyn (Conway)


Lewis, Kenneth (Rutland)
Roper, John


Lloyd, Ian (Havant &amp; W'loo)
Ross, Stephen (Isle of Wight)


Lloyd, Peter (Fareham)
Rossi, Hugh


Luce, Richard
Rost, Peter


Lyell, Nicholas
Royle, Sir Anthony


Lyons, Edward (Bradf'd W)
Rumbold, Mrs A. C. R.


Mabon, Rt Hon Dr J. Dickson
Sainsbury, Hon Timothy


McCrindle, Robert
St. John-Stevas, Rt Hon N.


Macfarlane, Neil
Sandelson, Neville


MacGregor, John
Shaw, Giles (Pudsey)


MacKay, John (Argyll)
Shaw, Sir Michael (Scarb')


Maclennan, Robert
Shelton, William (Streatham)


Macmillan, Rt Hon M.
Shepherd, Colin (Hereford)


McNair-Wilson, M. (N'bury)
Shersby, Michael


McNair-Wilson, P. (New F'st)
Silvester, Fred


Madel, David
Sims, Roger


Magee, Bryan
Skeet, T. H. H.


Major, John
Smith, Dudley


Marland, Paul
Smith, Tim (Beaconsfield)


Marshall, Michael (Arundel)
Speed, Keith


Marten, Rt Hon Neil
Speller, Tony


Mates, Michael
Spence, John


Maude, Rt Hon Sir Angus
Spicer, Jim (West Dorset)


Mawby, Ray
Spicer, Michael (S Worcs)


Mawhinney, Dr Brian
Squire, Robin


Maxwell-Hyslop, Robin
Stainton, Keith


Mayhew, Patrick
Stanbrook, Ivor


Meyer, Sir Anthony
Stanley, John


Miller, Hal (B'grove)
Steen, Anthony


Mills, Iain (Meriden)
Stevens, Martin


Mills, Sir Peter (West Devon)
Stewart, A. (E Renfrewshire)






Stewart, Ian (Hitchin)
van Straubenzee, Sir W.


Stokes, John
Vaughan, Dr Gerard


Stradling Thomas, J.
Viggers, Peter


Tapsell, Peter
Waddington, David


Tebbit, Rt Hon Norman
Wainwright, R.(Colne V)


Temple-Morris, Peter
Wakeham, John


Thomas, Jeffrey (Abertillery)
Waldegrave, Hon William


Thomas, Rt Hon Peter
Walker, B. (Perth)


Thompson, Donald
Wall, Sir Patrick


Thorne, Neil (Ilford South)
Waller, Gary


Thornton, Malcolm
Walters, Dennis


Townend, John (Bridlington)
Ward, John


Townsend, Cyril D, (B'heath)
Warren, Kenneth


Trippier, David
Watson, John


Trotter, Neville
Wellbeloved, James





Wells, Bowen
Williams, D.(Montgomery)


Wells, John (Maidstone)
Winterton, Nicholas


Wheeler, John
Wolfson, Mark


Whitelaw, Rt Hon William
Young, Sir George (Acton)


Whitney, Raymond



Wickenden, Keith
Tellers for the Noes:


Wiggin, Jerry
Mr. Anthony Berry and


Wilkinson, John
Mr. Carol Mather.

Question accordingly negatived.

Main Question put and agreed to.

Resolved,
That this House takes note of the Report on Developments in the European Community, July to December 1981, Cmnd. 8525.

European Community

Motion made and Question proposed,
That this House takes note of the Report on Developments in the European Community, July to December 1981, Cmnd. 8525.—[Mr. Brooke.]

Orders of the Day — Films (Distribution of Levy)

The Minister for Consumer Affairs (Dr. Gerard Vaughan): I beg to move,
That the draft Films (Distribution of Levy) Regulations 1982, which were laid before this House on 8th June, be approved.
I should like, first, to consider the reasons for the regulations, then to give the background to them and, finally, to comment on some of the points in them. They consolidate as well as amend. That will mean that people in the film industry who use them will find reference to a single document a good deal easier than to several as they do at present. The regulations are necessary to ensure that rules applied in distributing film levy conform with the provisions of the Treaty of Rome on freedom to provide services and freedom of movement of labour throughout the Community.
We are strongly committed to the preservation of the United Kingdom film industry. The measures are designed to ensure that every film receiving funds from the levy will contribute fully to our production and processing infrastructure. The levy was set up on a voluntary basis in 1950, following negotiations that were sponsored by Sir Wilfred Eady, to provide a levy on cinema admissions for the benefit of makers of British films in proportion to their success at the United Kingdom box offices. The scheme, usually called the Eady levy, was made statutory in 1957.
The proceeds from the levy are paid to the British Film Fund Agency. The National Film Finance Corporation automatically receives £.1·5 million from the fund, or 20 per cent. of the total, whichever is the greater. Other payments can be made to, for example, the Children's Film Foundation, the British Film Institute Production Board, and the National Film School. The balance is then distributed to makers of films which are eligible in accordance with the distribution of levy regulations, which the draft now before the House consolidates and amends.
Registration as a British film requires that 75 per cent. of the labour costs, with some exceptions, should be paid to British subjects or citizens of the Commonwealth or Republic of Ireland. That was widened by the Films Act 1980 to allow the inclusion of citizens of any member State of the European Community. The modification will be brought into force by a commencement order to take effect on the same day as these levy regulations.
An EEC maker of a British film can already, by virtue of the European Communities Act 1972, share in the levy distribution if he meets the residence qualification contained in the definition of eligible film, although in practice none has yet qualified. The regulations will extend this residence qualification in the definition of eligible film to include—this is important—residence in, or, in the case of a company, registration and control, in any member State of the Community.
I am glad to say that the regulations will also introduce some new safeguards. In framing these in the most effective way we have had considerable help from the industry. The Government believe that the measures will work. That belief is, I think, shared by producers and unions in the film industry. There will, for example, be a deduction of the amount of levy payable if more than 20 per cent. of an eligible film is shot outside the United Kingdom, although the abatement will not apply if the

shooting is based here. It is also graduated so that a film that is shot wholly abroad and not based in the United Kingdom will not be entitled to any levy. That is an important safeguard.
The other major amendment in these draft regulations is the removal of the ban on levy entitlement for films which at the time of registration for cinema exhibition were the subject of an agreement for showing on television. That rather complicated arrangement follows the recommendation of the Cinematograph Films Council, and of the interim action committee on the film industry. It is not the intention to divert funds from in-house television work to films, but to make it easier for television companies to invest in United Kingdom films rather than buy foreign ones, at the same time as helping film producers raise finance by pre-sales to television.
Films will continue to be ineligible for levy if they are shown on television within 12 months of registration. The industry's current arrangements, which, with exceptions, prevent a television showing within three years remain in force and are in no way affected by these regulations. As hon. Members will know, the Government intend to provide for a transitional tax regime whereby films that would be eligible for the Eady levy can continue.

Mr. K. J. Woolmer: There are many important matters in the regulations. The background to them is confusion and ineptitude in Government policy towards the film industry at a crucial stage in its history. The Government have failed to produce a coherent and constructive policy for the film industry.
After a marked recovery between 1976 and 1978, cinema attendances have fallen drastically by about 15 per cent. in 1981 and up to 30 per cent. in the past 12 months. In the past two or three months there has been an almost catastrophic collapse in cinema attendances. The British film industry, which produced many marvellous, popular and successful film in recent years, has been having a difficult time.
Video and other important technological changes are thrusting themselves on the already blurred but complex interaction between films, the cinema and television. The interim action committee on the film industry continues to produce its valuable and often constructive reports, yet the Government appear to be spellbound and incapable of thinking through and promoting a policy in response to the changing situation.
Playing around with the present levy and quota system is no substitute for the reappraisal of policy that is required. The other proposed regulation to suspend the films quota system is both badly timed and inept as a contribution to the search for a positive way forward for the industry. We shall insist on a debate on that in the autumn.
The raising of the film levy and its distribution is concerned with the wider issue of how to raise the money to help finance a lively and successful film industry. Before the levy is distributed, it must be raised. Is enough money being raised in the right way? Is it being distributed in the right way? Anyone looking at the film industry must surely feel that a major review of those issues is urgently needed. I shall briefly refer to those matters in a moment.
I refer to the regulations as narrowly presented to us tonight. As the Minister rightly said, there are three main


issues. First, we have the part of the regulations that widens the basis on which EEC film makers may share in the distribution of the film levy. What is the Minister's assessment of how this part of the regulations will affect our own film makers? Is this another case of Britain playing by the rules of the game while others ignore those rules? How do other EEC countries, especially Italy, France and Germany, treat our film makers with their industry assistance schemes? What film industry aid schemes do they have? Can British film makers benefit from them?
The second matter refers to regulation 10 which appears to offer an alternative way of ensuring that the levy fund is paid out mainly to finance film making in the United Kingdom. The objective behind this, as the Minister presented it, seems reasonable to me, although one could argue about the arithmetic of the formula. I should prefer to see film industry finance aimed directly at British film makers. Does this regulation conform to EEC obligations? Is there any prospect that that regulation will, in turn, subsequently be weakened?
The third matter concerns the removal of the disentitlement to a share of the film levy fund in the case of films where there was, on registration, an arrangement for showing them on television. Here we are in the middle of a complex system of relationships and, as the Minister said, in the middle of a potential conflict of interests. On the one hand, we all recognise that television is a heavy user of films and a source of film viewing appreciated by millions of families. Television ought to put much more money back into film production. The question is whether this is the best way to do it, because the regulations drop the effective ban on prior agreement to showing films on television in the reasonable expectation that television and other companies will be more willing to finance new film production, backed by prior agreements on the sale of TV rights.
On the other hand, if cinema films are shown quickly on television two problems arise that must be recognised. It may help to produce better television films, but it may damage the cinema. Why pay to go to the cinema when the film can be seen on "the box" in one or two years' time? I shall refer to that point in a moment. Secondly, this development could lead—the Minister recognised the possibility—to the bypassing of established ways of producing TV films and programmes. This is bound to concern the trade unions involved. Did the Minister consult the trade unions on this aspect of the regulations? If he did, what were the observations of the trade unions?
The Minister argued that the three-year trade bar on the showing of new cinema films on television will still reduce the problem. However, it seems highly likely that the removal of disentitlement and, hence, disincentive, will bring substantial pressure on that trade bar. It will be such that the one-year bar will become the effective restraint. Does the Minister agree with that, or does he stick by his view that the three-year bar will remain effectively in force? That seems contrary to the expectation of raising the disentitlement.
I said earlier that money can be distributed only if it is first raised. How best to distribute the money surely depends in part on how it is raised and on how much is raised. The interim action committee on the film industry, in its fifth report in March this year, considered that

problem and its relationship to the changing media and technology. It said in paragraph 41 of its report on page 10:
The distribution and exhibition sectors of the British film industry have, for some years now, been undergoing continuous changes and considerable contraction … Where does the future health of the British film industry lie?
That is a matter on which the Minister should give his views and those of the Government. The report continues:
Over the next decade, the exhibition of films on television, the transmission of programmes by cable television and satellite and the use of video discs and video tapes will have a considerable impact on the distribution and exhibition, as well as on the production, of feature films".
The report went on to say
All the new exhibition systems should be developed only on the understanding that the exhibition or sale of feature films by these means should carry with it a contribution to either the Eady fund or a similar scheme, the proceeds of which would be returned to the industry in such a way as to encourage film production in this country … The application of the Eady levy or a similar scheme … would in part redress the existing anomalous situation in which cinema theatres are required, through the levy, to help financially in the production of films, while films exhibited on television make no such financial contribution".
It is a serious problem and I am distressed to see the Minister come to the House yet again and not face up to the urgent issue before the film and media industry. These are important issues, fundamental to the financing, viability and vitality of our film industry. The Minister should be using opportunities such as this debate to give his views on it and to instil a sense of urgency and direction into his actions.
There are also many important matters concerning the distributing of the finance raised to assist, support and develop our British film industry. In the short term, faced by declining cinema attendances—but not, we note, by declining television or video audiences—the film levy is falling sharply in real terms. The committed sums to bodies such as the National Film Finance Corporation, the National Film School and the other bodies the Minister mentioned mean that the finances they have are grossly inadequate in themselves but also that the balance for distribution among film makers is becoming so marginal as to be ineffective.
What assurance can the Minister give on the diminishing funds available from the levy so that the key film industry organisations and British film makers are assured of a significant and meaningful financial input? Will he review the whole position in the light of the very deep recession and the changing structure of film viewing technology and media, to which he made no reference whatever this evening? Is he really content to continue with greatly divided and numerous film agencies and Government departmental responsibilities? How can 'we develop coherent policies for our film industry when the Departments of Trade, Education and Science, and Industry, as well as the Home Office, all exercise separate conflicting and jealously guarded responsibilities?
Will the Minister look again at the proposal for a British Film Authority? It was first made by the interim action committee and endorsed by the Labour Party. While recognising the need for care in getting the right framework to encourage flexibility and to prevent over-centralisation and the stifling of innovation, the Opposition believe that such a step is an essential part of promoting and strengthening the British film industry.
The film industry has to adapt to and evolve with the times. Changes are occurring rapidly and will continue. The industry will need to build on the changes in media and technology so evident to us all in this House. Assistance should go, not only to film makers, but to exhibitors, including cinemas. Films and cinemas are, in part, a social phenomenon, to be absorbed and enjoyed in a social atmosphere. Far too much of our changing technology is reducing our social experience and enjoyment. We need a film industry, not just for the sake of the jobs, the craft and the artistic expression, but as part of the contribution to a wider social enjoyment and appreciation.
In part, these regulations are acceptable. In part, they raise serious concern. Above all, they represent another lost opportunity to put forward positive and progressive policies to build up our film industry for the benefit of us all.

Mr. Tony Durant: I start by declaring an interest. I am a consultant to the British Film Producers Association, which is certainly not against these regulations.
I want to follow up one or two of the comments of the hon. Member for Batley and Morley (Mr. Woolmer). Indeed, I want to endorse some of the things that he said. First, cinema attendance has been dropping steadily over the years. The result, as the hon. Gentleman rightly said, is that the amount of money that is left in the Eady levy, after paying the statutory requirements, is diminishing. The levy is gradually becoming a non-existent activity. The sums of money are getting smaller and smaller. The Government will have to decide whether it is worth while going on with it in the long run, unless we involve television, and in my opinion television should take its responsibilities seriously in film production.
The demands of television are enormous. The consumption in material is fast, ever-demanding and ever-increasing. Here is a wonderful opportunity for a creative industry in this country, which makes good films and has a good reputation, to make films for marketing abroad, not only in the United States but in other countries. I urge the Government to look again at the role of television in this connection.
The video cassette, the disc, the cable and the satellite are all methods of projection. There are certain technical differences in the production of a film for television as against the cinema, but basically they are all methods of projection to the audience in one form or other. We are talking about a creative medium. We have to make a product which then has to be sold to the system so that people have an opportunity to see it.
It is time that the Government discussed with the television industry ways of helping film production. That is what we are talking about—not the composite world of the film industry, but film production. We have only one small studio left in this country, and that is Pinewood. It is the only fully operational studio. There are others where one can hire a lot, but Pinewood is the only studio where there is everything—plumbers, electricians, carpenters, and so on. At the moment, Pinewood is being backed by

American money and is making a big American production. It lives from day to day and sees no definite prospect for the future.

Mr. Tim Brinton: Will my hon. Friend confirm that when companies, such as the American company, hire Pinewood, and the producer qualifies in residential terms, he qualifies for Eady money? Is that correct?

Mr. Durant: I believe that that is so. The Government have tightened the provisions relating to capital allowances in the Finance Bill, but I think that the producer will still qualify for the Eady levy. I am not sure whether that is a good or a bad thing. I take a neutral stance. At least it provides work for a studio which employs many people. The Government and the House should consider ways of helping the industry.
There is tremendous talent in the British film industry. The American film industry has spent a lot of money in Britain—although it has now returned home because of the recession there—and respects the talent of our movie business. The Government should recognise that.
I do not agree with the suggestion of the hon. Member for Batley and Morley about a British Film Authority. It would be another bureaucratic machine. I accept his point that there are already too many different establishments involved in a small industry, but the proposal in the Wilson report for a film authority is not the right way to proceed. There may be an argument for the amalgamation of many of the existing establishments.
I support the general measure. My only reservation is that if the industry continues as it is film making will become non-existent and the Eady levy will decline so much that it will no longer be important. The Government must come to grips with television production and bring it more into the area of new outlets. If we do not do that we shall have mainly American-type entertainment, which the public do not want. They want British material. I commend the proposal, but we are not doing enough about television.

Mr. Bryan Magee: My right hon. and hon. Friends and I welcome these changes in the regulations, which are improvements to the operation of the Eady levy. As the Minister said, the changes are welcomed both by film-makers and by the industry's trade unions. The Association of Independent Producers has been clamouring for such changes for a long time. However, as has been said by everyone except the Minister, the changes do not go far enough, and his failure to put forward broader vistas or proposals for the industry represents a failure by the Government to play their part in the present and future prosperity of one of our potentially most important industries.
The Eady levy system is in serious danger of breaking down. The reasons for that can be stated concisely. The fundamental idea of the levy was to channel some of the money paid by the mass audience watching films into film production. Since it was set up when the bulk of film viewing was in cinemas, it took the form of levying a proportion of the price of each ticket and sending that money to the film producers, as well as to other organisations that creamed a little off the top.
Since that system was set up more than 25 years ago, film watching in Britain and in other countries has changed


fudamentally. The mass audience watches films not in cinemas but on television. We also have video cassettes, and cable television is about to start. So, because of technological and historic change, we now have a system for financing films that does not recognise the nature of the mass audience. The Eady levy, as it works today, is a levy on a tiny proportion of those who watch films and therefore attracts only a tiny portion of the money that it should obtain to channel to film producers.
The fundamental reform that is required is a restructuring of the system of who pays the Eady levy. We do not need the British film association proposed by the hon. Member for Batley and Morley (Mr. Woolmer). That is yet another centralised, State, bureaucratic, monolithic piece of old-fashioned nonsense.

Mr. Bob Cryer: Nonsense. The hon. Gentleman cannot even get the name right.

Mr. Magee: The hon. Member for Keighley (Mr. Cryer), who is sitting with his feet on the Bench, is talking his own characteristic nonsense. A single authority is not the answer to the problem we are facing. We need to tap the mass television audience, the video audience and, in future, the cable audience. At least two of these sources do not provide serious difficulty. It is within the Government's competence and power to introduce legislation that would require the television companies, both the commercial companies and the BBC to pay to the Eady fund a levy on all films shown on television.
Cable has not yet begun, so it is within the Government's power to make a contribution to the Eady fund a condition of any franchises that are given to cable. Video cassettes present more of a problem because the great bulk of them are illegally made and distributed. I noticed only this week in Screen Digest that the trade assessment of the proportion of video cassettes that are illegal is 78 per cent. If anything like that figure is correct, it means that this country is the international headquarters of a giant illegal industry.
I was pleased to see that, only the day before yesterday, the Minister for Trade showed in the House that he was aware of this scandal and specifically said that he sees the need for legislation to clear it up. If the Government are as good as their word, the way lies open to tapping the sources of money that would be available from all the media in which films are predominantly shown, and will continue to be so—television, video and cable. That money can then be put back into film producing.
That is the approach that the Government should be adopting. The differences in the sums involved are tremendous. I am advised that this year the Eady levy is likely to raise about £3·5 million. Over a year ago, the Boulting brothers, giving evidence to the Select Committee on Education, Science and Arts, said that if the contributions to the fund were widened in the way that I have suggested, they would produce a revenue of between £50 million and £80 million. That was an expert valuation, and in the values of more than a year ago.
So the difference between what is being raised by the present system and what could be raised by the perfectly feasible system that I have outlined is a difference of many millions of pounds. It would transform our film industry. What is more, we are now at a time when, after years of serious depression, our film industry is beginning to show signs of what could be a major renaissance.
It is not just that we have succeeded in producing some of the best films for many years, such as "Chariots of Fire", which are both unprecedently commercially successful and also very good films in their own right. It is also, and chiefly, because we are about to open a fourth TV channel which is to be run by people who recognise the opportunities that will be available to them in the promoting and financing of film making.
In some countries, such as Germany and Italy, television, which is the chief user of films, is also one of the chief financiers of films. We have a channel about to open where the need for this, and the opportunity presented by it, is recognised by the people who are to run the channel. The Government have the power to put the two ends together. They should take the opportunity to do so in this Session of Parliament.

Mr. Tim Brinton: May I first declare my interest? I am a paid-up member of the Association of Cinematograph, Television and Allied Technicians as a producer, although, unhappily, I have had no benefit from the Eady levy for a long time. I am also a member of the Select Committee on Education, Science and Arts, which is in the process of making a report on the arts, including film, as has been mentioned. I shall seek not to pre-empt any conclusions that it may make. I shall speak personally tonight.
I want to say a little more strongly than have other hon. Members tonight how absurd it is that we are looking at the problem in this way in order to make new regulations for the Eady levy. The hon. Member for Leyton (Mr. Magee) said that this year's estimate of proceeds from the Eady levy was £3·5 million. What has not been said is that the figure for 1978–79 was £7.7 million, for 1979–80 it was £6.1 million and for 1980–81 it was £6·7 million. Therefore, there is a steady downward drift.
If one considers that a major international feature film will cost double £3·5 million—perhaps more—one begins to see how pathetic are the proceeds of the Eady levy, as we know it today. People's habits have changed. I do not believe that any amount of incitement under present circumstances is likely to cause a huge growth in the number of people going to cinemas. After all, they can films at home. Without dwelling on it, I would go along entirely with those hon. Members who have suggested that television, in all its forms, must be persuaded urgently to contribute to the feature films that it often gets so cheaply from the feature film industry.
The feature film industry is different, with a different production technique, from television. The whole economy of television is contrary to the loving care and length of time that is spent on the feature film. Therefore, it is vital that the ordinary feature film audience that has now transferred its attentions to the living room should pay the Eady levy contribution that it used to pay when the levy was created in 1950. That is all that we are asking.
Last year, with a group from the Select Committee. I visited the United States of America. I had the pleasure of meeting a senior American film and television executive. The first thing that he said was that if I wanted to know what was wrong with the British film industry, one thing that could be done straight away was to stop people, such as American executives who make big finance pictures, from benefiting from the Eady levy.
The amount of help that is given to the American who comes over here and qualifies for the Eady levy is, in terms of the big international film, infinitesimal. It does not matter to him. However, if the regulations were tightened to prevent that money from going out of Britain—that assuredly is what it does; it does not go into producing more British pictures, which is what we want—then that would at least top up the fund a little.
There are other matters that I am sad have not been tackled in this interim attempt at solving the problem. It is well known in the industry that often the Eady levy does not get back to the man who makes the film. It may be free trade for a hard-pressed producer to do a deal with a distributor in such a way that the distributor ultimately gains that Eady money, in which the Government should not interfere. However, the Government have a duty to see that that levy should go directly into the production of new films. This can be done, as I believe happens on the Continent, by imposing a condition whereby the money has to be used within 12 months for a new production. This would be an incentive to producers to make new films.
I have implied, with regret, that we have not begun to tackle the problem. The Government should carry out a major overhaul of their responsibilities for films, television and all the appurtenances spread over at least three Departments. They should also examine ways to preserve the esentially private freedom of the feature film maker who is not, as some people believe, a rich, fat cat living off the contributions of cinemagoers. The feature film maker is eternally struggling to raise the monumental sums needed to keep a flourishing British feature film industry in existence.

Mr. Bob Cryer: An eligible film is defined in the regulations as "a co-production film" and as
a film which is registered as a British film and as a quota film".
Under an order shortly to come before the House, quotas will be suspended. It would be interesting to know the effect of that order on the regulations now being discussed. Although the Eady levy was designed to benefit British film production, its effect almost certainly goes wider, because the definition of a film registered as British is not sufficiently tight to ensure that the levy goes back into British film production.
Some changes have been made to the Eady levy. A number of smaller screens have been exempted, largely as a result of the development of multi-screen cinemas. This has resulted in a decline in the product of the levy. I should like to know how the Minister sees the levy developing. It is important in maintaining an indigenous British film industry and as a means of reflecting the cultural aspirations and views of the community and the nation. The cinema and the production of films is still the most important popular art form today. There is need for a cinema that is not involved in a mid-Atlantic multinational concept but reflects the important values and attitudes of the nation.
The film "Gregory's Girl" was produced relatively cheaply and financed by the National Film Finance Corporation. If the Eady levy money diminishes markedly—I shall be interested to hear the Minister's views—the possibility of future films like "Gregory's Girl" being made will be diminished. Sources of money

for film production in this country are slim. The National Film Finance Corporation represents the only indigenous source of money specifically directed towards British film production.
The total revenue of the Eady levy would have been soaked up by "Chariots of Fire", another highly successful British film. The producer of "Chariots of Fire", David Putnam, and the director of "Gregory's Girl", Bill Forsyth, have combined after making two highly successful films. They won Oscars in the United States of America and awards in this country. The films have been highly successful in America, not because they imitated, but because they showed our country in a bold and imaginative way. The producers and directors of those two films had the greatest difficulty in raising money outside the United States of America for the production on which they are about to embark.
We need to recognise the importance of the Eady levy in maintaining a British film industry. Although it is important to have American investment, we do not want to be swamped by it, and we should recognise the precarious nature of such investment. Pinewood is the only full-time studio which employs permanent staff, which has a regular apprentice intake, and which is recognised throughout the world as maintaining high standards of craftsmanship. There are other studios on a four-wall basis. Pinewood is producing two films which occupy all 16 stages. If there were a change in the exchange rate, American investors might feel that they could invest more profitably elsewhere. The British film industry would again be in serious difficulty, not only at Pinewood, but at Shepperton and Elstree.
I echo the point that has been made by several hon. Members about the need to extend the levy to television. In the past, television companies and the BBC have waxed fat by obtaining highly popular films too cheaply. Recently, more realistic fees have been negotiated. I believe that they should make a contribution to the British film industry. The Minister should bear that in mind.
I agree with my hon. Friend the Member for Batley and Morley (Mr. Woolmer) that this measure is a piecemeal approach to the problem. The whole matter should be fully examined. The National Film School, which is financed by the Eady levy, provides technicians for the television industry, yet television provides only a fraction of the money that is required. The cinema finances the training of film technicians, but, because there are so few opportunities for them in the British film industry, television receives the most benefit. We need an overall policy for the British film industry, because it could be hit by another crisis within a few months.
Video pirating is important. The Minister will no doubt say that a Private Member's Bill has just been passed under which it is an offence to handle pirated video copies of films by way of trade. That still does not overcome the problem of proving that the person knew that the copies were pirated. The Government must examine that problem carefully and bring forward legislation quickly, because it is a sore that affects film production. The seed corn of the industry—the investment for new films—is being eroded by the people committing the criminal offence of pirating the films into which so much care, effort and risk-finance has gone.
A multiplicity of Government Departments deal with the film industry. The hon. Member for Leyton (Mr. Magee), who spoke on behalf of his new party, the SDP,


suggested that it was nonsense, the drab hand of the State, and so on, to have a British Film Authority. He called it an association. He could not even get the title right, so it is difficult to see how he could make a judgement on the nature and character of the organisation.

Mr. Magee: I was attempting not to name the Labour Party's proposed authority, but to describe it. In an essentially creative activity, what is desirable above all is pluralism and diversity, and not State monopoly or burearcracy.

Mr. Cryer: I am surprised that the hon. Gentleman raises the question of monopoly. In any case, the idea of having a British Film Authority is to help film producers. It would not control them; it would concentrate the various Government agencies into one authority which would make things easier.
I am surprised that the hon. Gentleman is worried about control. He did not mention the oligopoly that controls film production, distribution and exhibition. The major circuits, which produce 70 per cent. of cinema, are owned by two companies, Rank and EMI, as are the major film studios and distribution arms. The very diversity that we all want is limited by the industry's structure.
We want the diversity and richness that comes from a number of people making films that represent human virtues, and no doubt vices, and interpreting the human spirit of our nation. They will not be made unless there is the financial ability to make them. If we are not careful, the Eady levy will be diminished and the potiential will disappear. People like Bill Gregory, who started in a modest way, will not have the opportunity to diversify. We shall be swamped in a sea of mid-Atlantic productions. That is the anxiety over the regulations. Although the regulations have merit, they contain matters about which we have reservations. I have raised one such issue with the Minister.
Other regulations are to come. There has also been a Private Member's Bill. It is a piecemeal approach, and we need to take a comprehensive look at the industry. For one thing, that would give the industry a good deal more confidence. In a high-risk industry, when several million pounds can be spent on producing a major feature film, there must be confidence that there is a sympathetic framework within which the producer can make the investment.
I hope that the Minister will respond helpfully.

Mr. Tom Clarke: I have found this one of the most interesting debates that I have heard in recent weeks. Although I do not now have a specific interest to declare, had the debate taken place four weeks ago I would have had to declare that I was employed with the Scottish Council for Educational Technology, embracing the Scottish Film Council. The electorate of Coatbridge and Airdrie put an end to the association, but they did not end my interest in films.
Although we are dealing with the practical matters that the Minister has put before the House—the obligations arising from the EEC regulations and so on—my hon. Friend the Member for Batley and Morley (Mr. Woolmer) was right to extend the argument and to give notice that we want a longer debate in which the House can consider the future of the British film industry.
Even in these difficult times, a number of plusses ought to be associated with those involved in British film. I do not entirely agree with the hon. Member for Gravesend (Mr. Brinton) who talked about a lack of excitement, although he was right to regard the debate as an interim attempt to deal with the problem.
Last summer, at the beginning of the Edinburgh film festival, I was present when the 1920s monochrome version of "Napoleon" was presented. A live orchestra was present, and the atmosphere was absolutely outstanding. There is no way in which that kind of presentation could come over on television or on video. It would be a great loss to film art and culture if the opportunity for presentations of that kind were decreased.

Mr. Brinton: I entirely appreciate the excitement felt by the hon. Gentleman on that occasion. My point was that in ordinary cinemas throughout the country there is an insufficient audience and a lack of excitement. I agree that special events such as the Edinburgh festival are totally different.

Mr. Clarke: I accept that, especially as I agreed with many of the hon. Gentleman's other points. We all have a responsibility to respond to the excitement and endeavours of the British film industry. We need only think of the films "Gregory's Girl" and "Chariots of Fire". Not so long ago, there was a great struggle to have the film "Kes" marketed and shown. People associated with such films are entitled to have their productions shown so that they can appeal to wider audiences than exist today.

Mr. Durant: The hon. Gentleman mentioned the film "Kes". At that time the distributors and exhibitors felt that the people in the south would not understand the film. That shows that they are not aware of what the public really understands.

Mr. Clarke: I accept that. Anything that brings the regions together, even if it happens to be films such as "Kes", is to be welcomed.
The amateur film movement, with which I have been associated, is also relevant to the debate. I have been secretary of the Scottish Association of Amateur Cinematographers. Were the cinema to wither—I do not envisage that prospect—those involved in amateur film groups and committed to the future of the amateur film movement would have great difficulty finding someone who was willing to respond to their activities.
I was happy to be associated with the international amateur film festival in Scotland. Some years ago it was presented in the Cosmo cinema in Glasgow, but more recently at the Glasgow film theatre and in London. That festival invited entries from throughout the world. If the cinema ceased to be important, the amateur film movement would suffer gravely. Consequently, people such as Ken Russell, who began his career as a contributor to amateur film making, would never be heard of. That would be a great tragedy, not just to the British film industry but to the international film scene.
I believe, too, that much encouragement should be given to schools and colleges to develop amateur film education, although it should be clear that film making and film production do not end there. To achieve that aim, we should be seen as a nation to support amateur film making which leads in later years to professional film making.
A rather surprising example to me of the way in which other countries have been more successful than we have


is the amateur film festival at San Feliu in Spain, which I have attended for many years. That festival is entirely sponsored by the Spanish tourist authorities. They see it not just as a contribution to film making and presentation but as a useful spin-off for the tourist industry, and are right to consider it in that way.
There are tremendous opportunities for development of film in this country. That potential will be developed not just through debates such as today's discussion of the levy, however inevitable and right such debates may be, but through a commitment seriously to examine the resources available and their distributuion. There are so many people like the Bill Forsyths of this world who believe that we can remove the frustrations and give film a future that it is clearly worth while to make that commitment.
I believe that a British Film Authority should be set up. At present, a large number of organisations, groups and individuals are trying in an unco-ordinated way to put their case across. We should co-ordinate the activities of those involved in the industry at every stage because that level of sophistication can do nothing but good for the future of the British film industry.

Dr. Vaughan: With the leave of the House, I shall try to answer some of the points that have been raised. We have had a short but extremely interesting and important debate. I assure the House that the Government fully appreciate the gravity of the situation. I sensed from the debate that, although there are serious problems, hon. Members believe that if they are handled properly there are great opportunities for the future. That message has come from all parts of the House. Hon. Members were also generally agreed in welcoming the regulations, although we all recognise that there are limitations, and my hon. Friend the Member for Gravesend (Mr. Brinton) was right to refer to them as interim regulations.
It is important that I endeavour to answer as many of the points as I can. In doing so, I shall be brief. If I miss any specific points, I shall be happy to write to hon. Members about them.
We all appreciated the way in which the hon. Members for Batley and Morley (Mr. Woolmer) and Leyton (Mr. Magee) spoke, and I was especially glad to have the support of my parliamentary neighbour, my hon. Friend the Member for Reading, North (Mr. Durant), in the constructive series of comments that he made in his short speech. Hon. Members in all parts of the House spoke with understanding and feeling for the industry.
This debate provided us with the first opportunity to hear the hon. Member for Coatbridge and Airdrie (Mr. Clarke). I recognise his depth of feeling on the matter.
We all agree about the importance of film production. My hon. Friend the Member for Reading, North will note that I carefully said "film production", not "film industry". We all want viable film production. My hon. Friend the Member for Reading, North and others pointed out that it provides great social benefits.
As the hon. Member for Coatbridge and Airdrie said, there is much excitement in making films. He did not consider fully, perhaps, the quantity of amateur film makers who become professionals. There is quite a steady flow of them. When we discuss the professional sphere,

therefore, we must ensure that the doors are kept open so that enlightened amateurs can move on and establish themselves.
The hon. Member for Keighley (Mr. Cryer) especially reminded us that the Eady levy is an important part of our film production. He also pointed out how important films are to our social structure and to the nation. We all agree that there should be an overall view of what is going on. I shall return to that matter.
Although I recognise that there are differences in aesthetic approach, the artificial distinction between cinema and television films must be eliminated. The distinction is artificial. They are complementary aspects of the same type of activity. If anything is calculated to hinder our chances of making the best use of cable and satellite transmissions, it is the insistence that there must be a real, rigid and continued distinction between cinema and television films.
I agree with my hon. Friend the Member for Gravesend and the hon. Member for Keighley that television should accept more responsibility for the financial aspect of film production. Hon. Members are right to say that both ends of that aspect must be examined—how money is raised, who contributes, and who receives.
There is a decline in the Eady levy. The total was £7 million in 1980, whereas in 1981 it was only just over £6 million. We had hoped for £6 million in 1982 but, in the light of the current monthly returns, the revised estimate is probably £4·53 million. Moreover, it is estimated that it will be even less next year. One must be cautious when comparing short periods of time, but it is worth comparing the following three-month periods: April 1981, £410,000; April 1982, £300,000; May 1981, £720,000; May 1982, £200,000; June 1981, £150,000; June 1982, £150,000. The totals of £1,280,000 and £650,000 reveal that there is a major and apparently steady decline in the amount that is raised. Because the money is based on attendances, it reflects a decline in the number of people who attend cinemas. The hon. Member for Batley and Morley may know that my hon. Friend the Under-Secretary of State for Trade intends to institute a major review of the Government's policy on the film industry. We recognise the urgency. I assure my hon. Friend the Member for Reading, North that it will cover the film production, the video, cable and satellite transmission. There are opportunities, as hon. Members have said. We are determined to take an overall view and to take advantage of the opportunities.

Mr. Jack Dormand: Is the Minister saying that the Government have decided to undertake a major review of the film industry?

Dr. Vaughan: That is correct. It is the intention of my hon. Friend the Under-Secretary to institute a major review.

Mr. Dormand: When?

Dr. Vaughan: We regard it as urgent. I cannot go further than that.

Mr. Woolmer: I welcome that statement, which is at odds with statements that I have heard and read in recent weeks and months. When will that important review be established? What will be the time scale? When will a report be made to Parliament? One of the Minister's predecessors, the right hon. Member for Chingford (Mr.


Tebbit), as long ago as 1980 said that he intended to have a long-term review. There should be a review during this Parliament. I should be grateful if the Minister could give us that assurance.

Dr. Vaughan: The hon. Gentleman will not be surprised that I cannot commit my right hon. and hon. Friends further than to say that that is their intention. Hon. Members will appreciate that there is also consultation about the cable and satellite television aspects. There are many aspects.
Some hon. Members talked about diversion of funds from television work to the film production side. Our intention at the moment is not to divert funds from in-house television work, but to make it easier for television companies to invest in United Kingdom films rather than buy foreign films and at the same time to help film producers to raise finance by pre-sales to television.
It is relevant to note that the BBC's seed money is largely unused for lack of projects coming forward. The Federation of Film Unions was consulted. It felt that there was a danger of diversion of funds from television but other parts of the industry supported the removal of the ban. We shall look further at those matters.
With regard to the suspension of quotas, I refer hon. Members to the text of the answer given by my hon. Friend the Under-Secretary of State for Trade to a question from my hon. Friend the Member for Fife, East (Mr. Henderson). There will be an opportunity for a debate when the order for suspension of screen quotas is brought before the House. As hon. Members know, it has already been laid.

Mr. Woolmer: With regard to the contribution of the television industry to film production, or, as I prefer to say, the wider aspects of the film industry, the Minister does not appear to have met the feeling of hon. Members. Something much more substantial is involved. The Government have not addressed themselves to the matter in the appropriate way. Will the Minister give an assurance that he has not closed his mind to other ways of channelling money directly from the contribution of the television industry into films? He has misread the feelings of hon. Members. That issue is exceptionally important. It is probably the nub of the matter. If the Minister cannot give that assurance, I shall be extremely unhappy at that unsatisfactory outcome to an excellent all-party debate.

Dr. Vaughan: The hon. Gentleman does the Government less than justice. We are mindful of the problems. We regard them as urgent. We recognise the need to have adequate financial resources. The hon. Gentleman need not chide us and take a gloomy view. There are difficulties, as the hon. Gentleman realises. My hon. Friend the Under-Secretary will be glad to come back to him on those points.
The hon. Gentleman asked what would happen about other member States of the Community. He will know that the Commission has initiated proceedings against four member States—France, Italy, West Germany and Denmark. France is believed to have agreed to amend its legislation but, in common with Germany, it has not yet taken action. Denmark's position is not known.
The hon. Member for Keighley talked about market domination. The Monopolies and Mergers Commission's report on the supply of films for exhibition in cinemas has unfortunately been delayed and is not expected until

December. I am aware of what some see as the effect of market domination. I have read the fifth report of the interim action committee and studied its recommendations. I cannot usefully comment further until I have had a chance to study the Monopolies and Mergers Commission's report.

Mr. Cryer: The Minister said that there is to be an urgent review of the industry. It is clear that account will have to be taken of the Monopolies and Mergers Commission's examination of the major producers, exhibitors and distributors in the industry. Is the review not to be completed until after December?

Dr. Vaughan: I do not think that hon. Members would want to try to commit the Government to an unrealistic expectation. The review will be embarked upon with urgency, but there are complications. It is important that we take an overall view. The commission's report will be extremely relevant.
I agree that films that reflect British life and manners have considerable value. The Eady levy contributes substantially to such films through the NFFCO. The future of many film organisations is thrown into relief by the decline of the levy. I accept that the National Film School and television have training responsibilities.

Mr. Durant: It is recognised that the National Film School contributes considerably to the training of producers for television. My hon. Friend talks about allowing the television industry to become more involved in production, but if it does it will do so only for itself. If it makes more movies, it will use them primarily for itself. Very few television films will appear on the cinema circuits. In that respect, the result will be rather like that of the National Film School.

Dr. Vaughan: I take my hon. Friend's point and I shall keep it in mind.
Mention has been made of a British Film Authority. We have doubts about whether it is a viable proposition. That being so, I do not think that there can be any question of additional Government funds being made available to establish such an authority.

Mr. Cryer: The hon. Gentleman referred to the importance of the National Film Finance Corporation and acknowledged that the industry is facing difficulties. Pending the completion of the review, which will not be before 1983, are the Government prepared to consider the possibility of additional funds to the NFFC, bearing in mind the decline in revenue from the Eady levy?

Dr. Vaughan: It is important to take note of that factor. I should like to consider the implications.
This is a time for less rather than more interference. There will be an urgent review of the Government's relations with the industry. The quicker that we get on with that, the better.
On the question of piracy, I am pleased that the Bill introduced in another place by Lord Fletcher, and skilfully piloted through this House by my hon. Friend the Member for Uxbridge (Mr. Shersby), has received Royal Assent. There is great concern about the level of penalties, and further consideration of that matter was promised by my hon. Friend the Under-Secretary of State for Trade on the Third Reading of the Bill in the context of the new penalties imposed in the United States.
The figure of 78 per cent. mentioned by the hon. Member for Keighley is correct. Piracy is a £100 million a year business. We must do all that we can to eliminate that criminal activity. There is agreement on both sides of the House on that.
I have endeavoured to cover as many points as I can. As I said earlier, if I have inadvertently missed any points, I shall be glad to take them up directly with the hon. Members concerned.

Mr. Dormand: The Minister has been generous in giving way, but I see a contradiction in two statements that he has made in the past few minutes. He said that the Government could not afford to make more money available for the indigenous industry, but when my hon. Friend the Member for Keighley (Mr. Cryer) suggested that more money should be made available to the NFFC, the Minister said that the Government ought seriously to consider that suggestion. That is a contradiction. We know that "Gregory's Girl" was made with NFFC money. Do not the Government and the Minister realise that the NFFC could be a profit-making concern?

Dr. Vaughan: Either I did not make myself clear or the hon. Gentleman misheard me. I said that we doubted the viability of what what proposed and that it would not be appropriate at this moment for the Government to consider making funds available. We should not deal with matters in a piecemeal fashion, and we should certainly not make funds available for something that might not be a satisfactory organisation. We shall want to look at that matter.
It is encouraging that both sides of the House welcome the regulations, although some hon. Members would like to see them extended. I take it that there is universal agreement that we must review and debate the subject in the House as soon as possible.

Question put and agreed to.

Resolved,
That the draft Films (Distribution of Levy) Regulations 1982, which were laid before this House on 8th June, be approved.

Orders of the Day — Transport Policy (Greater London)

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Garel-Jones.]

Mr. Neil Thorne: An efficient transport system is an essential ingredient in any industrialised economy. If, therefore, the authorities charged with the responsibility of maintaining the system fail in their duty, it is a serious matter, particularly to the businesses in the area that depend on the transport system for both the movement of their staff between home and work and the transport of goods between supplier and customer, both of which are vital to the provision of profitable employment.
In London, much of the responsibility for that duty has been vested by Parliament in the Greater London Council and, for many years, under the control of both main parties, the system has worked well. Of course, there have been differences of political emphasis over the respective priorities for expenditure of available funds, but that always appeared to be done for the intended benefit of both ratepayers and taxpayers.
However, all that seems to have changed recently. Now that responsibility for housing management has rightly gone to the London boroughs, the ambulance service has been transferred to the DHSS, and the London boroughs are taking an increasing interest in absorbing other function, such as planning and traffic regulations, the GLC appears to be turning its attention towards finding itself a number of new interests of a politically contentious nature. At the same time, the authority seems to have lost the will and the ability adequately to perform those responsibilities which it retains under the London Government Act 1963. Faced with that background, I ask the Minister urgently to consider the Government's policy on transport in the Greater London area.
The most basic of the responsibilities for transport in London is the road network. The recent rail strikes have demonstrated the vulnerability of London's primary road network to overloading through traffic congestion which increases travelling costs.
The prime reason for London's congested traffic is the absence of adequate modern roads to cope with the traffic volumes. The 1,000 miles of main roads which are the responsibility of the GLC are mostly all-purpose carriageways, often no more than 12m wide and with frequent intersections, while only 15 per cent. of the main roads in London have dual carriageways.
Despite having the biggest traffic control system in Europe, London's traffic speeds fell by 5 per cent. in the 1970s, in contrast with other metropolitan areas where speeds on average rose by 10 per cent. That is due to the low spending on roads in London compared with the rest of the country.
In 1978–79, spending on London's roads was only 4·4 per cent. of the national road expenditure, whereas the capital contained 12·7 per cent. of the population. To put it another way, the road construction spending per head in 1978–79 was £5 for London compared with £15 for England, £28 for Scotland and £41 for Wales.
The only long-term solution to the problem of London's increased congestion is the construction of new and improved roads. With responsibility split between the Department of Transport and the GLC for London's


primary roads, there is at present a lack of strategic planning, and in the case of the GLC a lack of political will to address the problem.
The total GLC expenditure on new and improved roads in the period 1982–85 is forecast at £181 million. The London boroughs will be spending £129 million in the same period, making a total local government expenditure of £310 million. Those figures include a number of small but locally important schemes, such as the A118 Ilford town centre diversion in my constituency.
To put the figures into some perspective, it should be noted that it is estimated that in 1980 alone the 2·38 million registered motor vehicles in London paid road tax and petrol tax totalling £1,380 million.
The standing conference on London and South-East regional planning made proposals, which were adopted by the County Surveyors' Society in its report, "Transport in the 1980s", and supported by the British Road Federation. They advocated an investment in London's roads of £3,300 million in the 12 years from 1980 to 1992.
Much still needs to be done which does not yet appear in any programme, and I hope that my hon. Friend will look most carefully at those issues of vital importance to the future well-being of the capital.
The railway system is also a divided responsibility between London Transport, under the control of the GLC, and British Rail, under the Department of Transport. The latter, we are only too well aware from recent debates, is in receipt of subsidies exceeding £2 million a day. With the new awareness of what the taxpayer expects for his money, I hope that we shall start to see some real improvement in productivity to give the national network a future leading into the twenty-first century.
London Transport has been under the control of the GLC since 1969, when the Government of the day handed over the entire network and rolling stock free of charge to the GLC, so that, unlike the other major transport undertakings in the world, it has no interest to pay or debt charges to reimburse on those major cost items. In addition, it also receives transport subsidies to help pay for new rolling stock and new lines and to help towards running costs. In spite of all that, the GLC has got itself into the most frightful mess.
The Minister will remember that I sent him a copy of a letter that I received from a member of the majority party on the GLC, complaining that the Secretary of State was not prepared to pass legislation to help it out of its difficulties. The councillor went on to complain that the Secretary of State had suggested that it should implement productivity measures to help reduce costs. It transpires that, on reflection, the GLC has now discovered that it does not have to break even, to remain within the law. In the circumstances, one can only draw the conclusion that its entire attitude has been one to cause the maximum political antagonism, and only when it found that this behaviour did not pay off in the London borough elections earlier this year did it have second thoughts and make any attempt to face its responsibilities.
I know that many of my hon. Friends have come to the same conclusion and that they have been most active in drawing the Government's attention to the waste and incompetence caused by the present GLC leadership. If my hon. Friend is still not convinced that something is sadly wrong, I would draw his attention to a particular example. A constituent of mine, a Mr. G. E. Diaper of 69, Meadway, Ilford, travels daily from Barking station to

Westminster on the District Line. He purchased a season ticket on 21 April 1981 for £407 to run until 20 April 1982. On 4 October 1981, as a result of the ill-fated "Fares Fair" policy, fares were reduced at the expense of the ratepayers. To avoid a mass of surrenders of current tickets and taking out new tickets at the reduced price. London Transport brought in a scheme whereby claims could be made for refunds. However, the scheme did not apply to tickets purchased at British Rail stations for use on London Transport trains. Here the arrangement was that the claim had to be made on expiry.
By 20 April 1982, the House of Lords ruling was known, but my constituent, having been promised a refund for the appropriate period, attempted to lodge his application form for a refund, but it was refused. He wrote to the London Transport Passengers Committee on 23 April:
My ticket has now expired and I am told by British Rail that refunds are being totally suspended.
I have been in touch with London Transport … who have confirmed this policy. They say that the House of Lords ruling was that the lower fares should never have been available and therefore there will be no more refunds".
There was no mention of all those who had already had refunds or those who had had tickets at the lower price throughout the period. He went on:
This is manifestly unjust; firstly because many, perhaps most, people had a refund and secondly because the low fares did operate for several months. It seems quite unfair that those of us who, because of BR policy, had to wait are now debarred altogether from reclaiming, in my case, some £60 or £70. I seek your comment, advice and help".
Mr. Diaper was surprised to receive a letter from the London Transport Passengers Committee which said, among other things:
The Committee have discussed the implications of this decision with representatives of the government, the GLC and LT. According to the GLC's interpretation of the Law Lords' ruling LT must do 'everthing practicable' to break even".
The letter then gave the committee's view on what the Government should do about subsidies to London Transport. It finished by saying:
The Committee sympathised with passengers who had not obtained a refund and realised that they could claim to be unfairly treated in view of the number of people who had been issued with refunds prior to the Lords' judgment. However, in view of LT's financial difficulties together with their legal opinion and the problems for passengers generally the Committee have decided that they were unable to take further action in this case.
I am sorry not to be more helpful".
That is surely a most unhelpful attitude for a body that holds itself to be a passengers' watchdog.
It appears to me that in cases of this kind perhaps the only solution is for the passenger to go to law to solve the matter. I for one have completely lost faith in the ability of the GLC to co-operate with the Department of Transport and its own passengers and staff in running London Transport, and I believe that it is essential to make alternative arrangements as a matter of urgency. The Government should consider creating a separate transport authority and appoint someone with a reputation for getting things done—perhaps someone like Sir Michael Edwardes—to take change and give taxpayers and ratepayers a sound and efficient service that is a credit to all concerned.

Mr. Sydney Chapman: I congratulate my hon. Friend the Member for Ilford, South (Mr. Thorne) on raising a subject of great importance to every Londoner.
I wish my hon. Friend the Minister to consider sympathetically one point. In the considerations that must be taking place about a new transport authority for our great city and metropolitan area, will my hon. Friend take up the point of my hon. Friend the Member for Ilford, South and consider a greater integration of the British Rail suburban commuter services and the London Transport Underground services? There is no doubt that the position is anomalous. A ticket for an equivalent journey on British Rail costs about half that on London Transport. This is a very serious matter for many Londoners. It makes a mockery of a public transport system, the purpose of which should be gainfully to assess how each part of transport can help a great city.

The Under-Secretary of State for Transport (Mr. Reginald Eyre): I am grateful to my hon. Friend the Member for Ilford, South (Mr. Thorne) for raising the topic. I shall do my best to answer his points. The Government's objective is to provide the framework for the development of a coherent transport policy for London. That requires a sensible balance, within the resources that the nation can afford, between expenditure on roads—I note my hon. Friend's points—and on public transport. For their part, the Government are making substantial resources available: for investment in the trunk roads programme within and bordering the GLC area, involving about £1 billion during the next 10 years; to support British Rail's London and South-East commuter services; to the GLC for expenditure on the building and maintenance of local roads; and—a point that has recently been severely misrepresented—for substantial support to London Transport.
The major responsibility for developing and implementing sensible, balanced and cost-effective transport policies rests with the GLC as the strategic authority for London. As we all know, the present GLC has a declared bias towards a public transport solution for London's problems and has decided against proceeding with the preparation of all but a few major road schemes.
The GLC's road programme is selective and on a much more limited scale than had been planned. I have noted carefully my hon. Friend's points about road building, and the most helpful thing that I can do is to arrange for my hon. Friend the Under-Secretary of State for Transport, who has responsibility for roads, to consider those points and write to my hon. Friend. The GLC decided that it could solve London's traffic problems at a stroke by introducing a massive reduction in London Transport fares at the expense of its ratepayers. We all know the seriously unsatisfactory outcome of that lack of balance towards its responsibilities for transport in London.
By any standards, the events of the past year have been extraordinary. They have also been disruptive to the travelling public, placed unnecessary burdens on London's ratepayers and thrown into disarray the workings of London Transport. As the present GLC has been in office for a little more than a year, now is a good opportunity to review the events of the recent past and to try to place them in perspective.
The first point to be clear about is how the current situation arose. Prior to May 1981, when the present GLC came to power, successive Governments and GLC administrations of different political complexions had managed to work together reasonably amicably in ensuring that London received a fair share of the available resources for transport and that services were maintained at a reaonable level.
The question that we must ask ourselves, therefore, is: what has happened to change all this? The GLC has been trying to persuade everyone that all the problems stem from the House of Lords judgment and the Government's refusal to introduce legislation to enable it to return to its former policies.
Let us examine the facts. The GLC decided to introduce its so-called "Fares Fair" policy without any proper consideration of how it could be paid for and the devastating effects it would have on London's ratepayers. It was mainly for these reasons that House of Lords judged this policy to be illegal. Having had its half-baked political experiment shown up for what it was, instead of coming to the Government to discuss the issues sensibly and to try to overcome the problems that it had created in a reasonable manner, the GLC then mounted a massive publicity campaign, full of half truths, which was designed to delude people that they could have something for nothing.
Simultaneously, to alarm people into supporting a return to its ill-considered policies, the GLC insisted on an unnecessarily restrictive interpretation of the House of Lords judgment in trying to make London Transport break even as soon as possible and inflicting a 100 per cent. fare increase on the travelling public as well as threats of ridiculous service cuts.
Throughout this period the GLC continued to mess London Transport about—I agree with my hon. Friend about that—making management's life impossible by refusing to give it firm guidance on its capital budget, encouraging the work force to take disruptive action and undermining the possibility of improvements in efficiency.
In these circumstances, it is hardly surprising that a number of inconsistencies have arisen, particularly of the sort described by my hon. Friend. As he no doubt knows, my Department has no locus in the matter of fare levels on London Transport. Nor can the Government be expected to underwrite all the consequencies flowing from the GLC's illegal action and the operators' subsequent dealings with their customers.
I was sorry to hear of the unfortunate experience of my hon. Friend's constituent, and I sympathise with him in his frustration. However, I am afraid that the only answer that I can give is that the question of refunds on season tickets must be pursued with those directly responsible.
The decision of the GLC to introduce and then abandon its low fares policy created a number of anomalies. I understand that London Transport was advised that the payment of refunds to season ticket holders would be unlawful following the House of Lords judgment. The executive felt that it had no alternative but to cease payment immediately as a first step towards returning to legality.
Although the suspension of the lower fares was also a legal imperative, it was not capable of immediate implementation because of the complex administration


necessary to implement a fares revision. The London Transport Executive recognises that this has led to unequal treatment as between one passenger and another.
Moreover, and I say this with regret, this is only one example of the sort of inequities brought about by GLC mismanagement. Another is the fact that London's ratepayers, whose burden was relieved by the House of Lords judgment, are nevertheless still having to pay off the considerable deficit incurred during the period that the policy operated.
All of this irresponsible activity on the part of the GLC has been conducted in the face of clear advice from the Government that the Law Lords judgment did not rule out a reasonable level of subsidy for public transport and that the task of the GLC should be to prepare a balanced and sensible plan based upon the considerable level of resources which had been made available to London Transport in the past, and which the Government made clear would continue to be made available.
Against that background, we should examine the Government's record in all this. We made available to the GLC the Attorney-General's opinion that the revised GLC budget for 1982 was perfectly legal. Therefore, there was no reason for the GLC to have delayed approving London Transport's capital budget.
We rushed through legislation to safeguard the position of the pensioners and disabled who were threatened by the consequences of the GLC's own policies. We offered legislation, which the GLC declined, to enable the deficit which London Transport had been forced to run up as a result of its low fares policy to be spread over five years, so cushioning the impact on fares.

Mr. Chapman: Will my hon. Friend confirm that if London Transport had taken the Government's offer this year's rates would not have needed to be increased to the extent that they were? In my constituency the GLC precept was increased by no less than 90 per cent.

Mr. Eyre: I am sorry to hear that. There is no doubt that the GLC's decision in this respect operated to the detriment of its financial arrangements in the way that my hon. Friend mentioned.
We have made it clear that we are committed to a continuing substantial level of financial support for public transport, in London as well as elsewhere. It must by now be perfectly clear to everyone that in recent years London has had the lion's share of transport supplementary grant paid from the Exchequer to local authorities—£180 million in 1982–83, as much as 40 per cent. of the total for the whole of England.
London Transport gets about £250 million a year in subsidy, £100 million of it from the national taxpayer. In addition, London's BR commuter rail services get a subsidy, wholly from the taxpayer, of about £150 million a year. Those are considerable sums, rightly so, to provide a substantial subsidy towards the cost of London's transport services.
On the question of legislation, we have also made it clear that, although we have no intention of legislating to allow the GLC to return to extreme high cost-low fares policies, we are quite prepared to consider whether there is a need to define more clearly the extent of the GLC's discretion to pay subsidies.
Therefore, we have made our policies towards public transport in London perfectly plain. We have leant over

backwards to try to help the GLC extricate itself from the mess which has been entirely of its own making. We have invited it to put forward a proper plan which has due regard to the level of resources which can reasonably be made available for London. We have made it clear that we want to see fares held and if possible reduced, with a substantial contribution being made from lower costs within London Transport.
We recognise that London presents particular difficulties in this, but the fact of the matter is that London Transport's costs have grown at a much faster rate than those of operators in other conurbations. It has begun to look at this, but much more needs to be done.
The Government's position is perfectly clear. We are waiting for action from the GLC. After all the havoc that it has created by its extreme policies over the past year, there are some signs that the GLC is now busily trying to reverse engines. It has recently acknowledged that the Lords judgment does not, as it was claiming, require London Transport to break even without subsidy, and it has at last approved this year's capital programme for London Transport. It is a pity that uncertainty was left hanging over London Transport for so long on much needed capital investment and with detrimental effect upon manufacturing industries in other parts of the country.
The GLC says that it has now produced a draft transport plan on which it intends consulting widely. However, what that amounts to is four or five so-called options which are in fact only illustrative cases of the effects of different subsidy levels. There are many other possibilities. Public consultation on this basis is no substitute for responsible decision by the GLC.
We have made it clear that what is needed now is a proper plan, not a series of options. If the GLC', claims for transport supplementary grant support are to receive proper consideration along with those of other counties, we must have firm proposals by the end of July. I hope that it will now come forward, as we have asked it to, with sensible proposals for London transport and not use this consultation exercise merely as another attempt to drum up support on a misleading basis for its former discredited policies.
It is disquieting to see that the GLC still seems to be plugging its "Fares Fair" policy, although there are some signs that it has at last recognised that a policy that would put an extra £1¾ billion on the rates over the next five years, and cost £3 billion in total, is not a viable proposition in today's circumstances. The alternatives which it seems to be advocating, however, which it refers to as "Restrained Needs", would still require an extra £l billion over the next five years. There is nothing very restrained about that.
No proper argument has been adduced in support of that in terms of the needs that would be met. Instead, the GLC merely puts forward generalised statements about the need to return fares to about the same relationship to average household income as they were in 1970. This represents a very disappointing response to our request to prepare a balanced plan using as a bench-mark the current level of resources going to London Transport. Instead of starting from this level and putting forward a well argued case for any increase, the GLC has started from the top and moved only slightly downwards.
The council has reluctantly recognised the burden that its high-cost policies would place on the ratepayer. But its


response is simply to misrepresent the effect of block grant penalties, which, in fact, operate even-handedly for all authorities, and to ask the Government to change the whole structure of local government finance in order to accommodate it. Rather than trying to work within the existing arrangements and to come forward with sensible policies, it still seems to be in danger of persisting in policies which have no regard to the present financial circumstances and the level of resources which can reasonable be made available to London.
In the light of events over the past year, we have been looking seriously at the organisation of transport in London. I assure my hon. Friend the Member for Chipping Barnet (Mr. Chapman) that the valuable point that he made about integration will be carefully considered.
The deliberately disruptive activity of the GLC has cast serious doubts over whether the present institutional arrangements are any longer workable. In consequence there have been widespread representations, by Parliament, by the chairman of London Transport and others, concerning possible reorganisation. What is quite clear is that there is a need to clarify the lines of responsibility between those who pay for the services and those who provide them.
A more arm's length relationship is required. London Transport needs clear strategy guidance but should then be allowed to get on with the major job of management and

providing services without back door interference. Secondly, a better definition is required of the purpose of subsidy and more accountability on the uses to which it is put. We need to redefine the powers and duties of those involved.
Then there is the whole question of the efficiency and scale of London Transport—whether it would operate more efficiently with smaller accountable units and whether there is room for more private enterprise operators, what further scope exists for reducing costs, for adjusting services more closely to demand and for using capital investment in order to increase efficiency, for instance, through automatic ticket dispensing and collection and more one-man operation.
More widely, there arises the whole question of the relationship between public transport and highways and between London Transport and British Rail fares and services. These are matters which we have been considering very carefully. We welcomed the Select Committee inquiry into transport in London and we shall be looking at its recommendations, which are expected soon, with great care.
London needs a stable, balanced and properly coordinated transport policy. Regrettably, that has been totally lacking over the past year. We are determined that Londoners will have a better deal in the future.

Question put and agreed to.

Adjourned accordingly at seven minutes past Twelve o' clock.